$4,000 gold pitched at Dubai conference

Delegates to the inaugural Dubai Multi Commodities Centre Precious Metals Conference have considered the question whether gold could head for $4,000 within the next five years.

Ross Norman, CEO of London based precious metals trader Sharps Pixley, was among those arguing that the market could move to a range of $3,500-$4,000, with Silver hitting $100 per ounce by 2017.

Delegates identified interest rates as key to this type of price development. Negative real interests rates in many economies are destroying the value of money held on deposit, which means traders expect demand for gold and silver to remain strong, pushing up prices.

However, investors could also face a so-called ‘black swan’ event, with Paul Walker of consultancy GFMS Thomson Reuters among those arguing that interest rates in the US are more likely to rise after that country’s presidential election in November this year. That would strengthen the dollar, sending the price of gold down. Walker told the conference that it required $120bn-$150bn of investment demand annually to sustain current bullion prices.

However, it was also argued that any rise in interest rates would push investors away from fixed income investments, sending bond markets into a tailspin, which implied that those seeking less risky assets than equities would have few other options than to once more increase their holdings of precious metals.

 

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