G-khan
04-07-2003, 08:52 PM
Sydney, April 7 (Dow Jones) - Spot gold could fall to US$300 a troy ounce when the war on Iraq ends, London-based SG analyst Stephen Briggs said in a report Monday.
SG is the corporate and investment banking arm of the Societe General Group.
"In the short term, the fall of Baghdad could push prices lower to US$300/oz," the report said.
The spot gold price at 0203 GMT was US$321.40/oz, down US$3.60/oz from New York late Friday and around 17.4% lower from the high of US$388.90/oz posted just two months ago on Feb. 5.
Optimism that the U.S.-led forces in Iraq could be victorious soon has led market participants to sell gold, traders said.
However, the SG report said gold's current trend points to a test of US$320/ oz, a level at which SG considers the war premium to have "completely disappeared" and representative of a short-term equilibrium price in line with fundamental factors.
With the gold price rally originating from a confluence of external factors, the waning of the potency of some or any of these factors could hurt gold, the report said.
"All in all, we tentatively believe that the high has already been seen and that prices will trend lower" in the second half of 2003, but gold is unlikely to fall to levels "remotely near" its lows of 1999-2001, the report said.
During that period, gold hit lows around US$250/oz.
SG is keeping its forecasts that gold will average US$325/oz in 2003 and US$ 310/oz in 2004, the report said.
Wong Chia Peck, Dow Jones Newswires, 612-8235-2957 chia-peck.wong@dowjones.com
http://www.newsnow.co.uk/cgi/NGoto/27243521?-2975
SG is the corporate and investment banking arm of the Societe General Group.
"In the short term, the fall of Baghdad could push prices lower to US$300/oz," the report said.
The spot gold price at 0203 GMT was US$321.40/oz, down US$3.60/oz from New York late Friday and around 17.4% lower from the high of US$388.90/oz posted just two months ago on Feb. 5.
Optimism that the U.S.-led forces in Iraq could be victorious soon has led market participants to sell gold, traders said.
However, the SG report said gold's current trend points to a test of US$320/ oz, a level at which SG considers the war premium to have "completely disappeared" and representative of a short-term equilibrium price in line with fundamental factors.
With the gold price rally originating from a confluence of external factors, the waning of the potency of some or any of these factors could hurt gold, the report said.
"All in all, we tentatively believe that the high has already been seen and that prices will trend lower" in the second half of 2003, but gold is unlikely to fall to levels "remotely near" its lows of 1999-2001, the report said.
During that period, gold hit lows around US$250/oz.
SG is keeping its forecasts that gold will average US$325/oz in 2003 and US$ 310/oz in 2004, the report said.
Wong Chia Peck, Dow Jones Newswires, 612-8235-2957 chia-peck.wong@dowjones.com
http://www.newsnow.co.uk/cgi/NGoto/27243521?-2975