According to a poll by the London Bullion Market Association, 15 out of 29 of the world's leading precious metals experts believe gold will reach $750 an ounce this year.
And they're putting their money where their mouth is. The poll is part of the LBMA's annual forecasting contest where the prize for the closest correct forecast is a gold bar.
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Last year's winner, Ross Norman, director of TheBullionDesk.com, predicts gold will hit a high of $850 an ounce in the coming year with an average price of $716. If gold reaches $850 an ounce, it would match the all-time high reached in 1981.
Norman forecast that gold would average $618 an ounce last year, coming within $15 of gold's average of $603. Norman was the sole analyst to predict that gold would trade above $600 last year.
"We remain manifestly bullish for gold but this is the year that is going to separate the men from the boys because the old factors of supply-demand we all used to look at are no longer the real drivers," Norman tells the Telegraph's Ambrose Evans-Pritchard.
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"There's a tsunami of cash hitting the market and we're moving to a new realm of crowd psychology. What matters now is what the hedge funds are doing, or the pension funds, who are adding all the time. The central banks of countries like Russia, China and Vietnam, are looking for alternatives to the dollar and are gradually buying gold," Norman added.
One other analyst predicts a high of $850 for gold. Jeffrey Christian, from New York's CPM Group, believes gold can once again meet its all-time high, telling Pritchard, "Mine production is not increasing as rapidly as had been expected, due to bottlenecks in starting new mines and expansions. Central banks have sold much of the gold they wish to sell."
On the flip side is Stephen Briggs, precious metals strategist at Societe General. Briggs forecast the lowest high and the lowest low of the group, predicting that gold will trade between $500 and $675 an ounce this year based on his view that the dollar will rally.
"Our house view is that the long U.S. dollar bear market will end in 2007; and we believe that the latter stages of the commodities bull market constituted a bubble, which is in the process of deflating," says Briggs.
The 29 experts say gold will trade at an average price of $652 an ounce this year with average highs reaching $742 an ounce and average lows at $566 an ounce. That means gold's upside potential is an increase of 18 percent, while its downside risk is a 9.9 percent decline.
© NewsMax 2007. All rights reserved.
Editor's note:
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