Gold: It’s A Multi-Year Bull Market, Says S&P

Array
(
    [0] => Array
        (
        )

    [1] => Array
        (
        )

)

Standard & Poor’s Equity Research has joined an increasing queue of market analysts to raise its future price projections for the spot gold price. S&P raised its 2006 year-end closing price projection for the metal to US$710 an ounce from US$600 previously.

In case you think it is all related to general expectations the US dollar is about to land in a freefall, the S&P press release is trying hard to convince you otherwise. According to S&P, the supply and demand dynamics in the gold market have now set the stage for "a multi-year bull market".

S&P believes decreased exploration throughout the 1990s has finally caught up with the gold industry and as it generally takes a few years for a new mine to become operational, S&P believes it is safe to assume market dynamics will push gold to higher price levels from here on still.

The prediction is partly based upon the expectation the gap between production and consumption of gold is likely to widen as output is expected to stagnate while S&P believes physical demand will rise further.

Click to view our Glossary of Financial Terms