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Wednesday, January 20, 2010

Philip Klapwijk’s LBMA Forecast 2010

Gold

Average $1,172
High $1,340
Low $990

Investment demand in 2010 will be well supported by low to negative real interest rates, a sickly US dollar and growing inflation fears, especially in the United States as policymakers react to the threat of a “double dip” recession by maintaining ultra-loose fiscal and monetary policies. The weight of money entering the market from non-traditional investors should help gold rise to above the $1,300 threshold, at which level we would expect collapsing jewellery demand and higher scrap supply to help put a brake on things. Given its ever greater dependence on investment, the yellow metal will be highly vulnerable to sentiment or policy driven corrections, although the latter will probably first require either inflation to reach worrying levels and/or the bond market to choke on the record amount of government debt being issued.

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