Commodities | Jun 06 2006
By Rudi Filapek-Vandyck
Analysts at Smith Barney Citigroup have raised their expectations for the average spot gold price to US$660/oz for the second half of 2006, to US$700/oz for 2007 and to US$750/oz for 2008, suggesting the only way is up for the metal from here on.
The analysts explain their move by referring to gold’s fundamental appeal as a hedge against inflation and – you saw this one coming didn’t you?- further US dollar weakness.
They also believe gold’s status as an alternative investment should insulate it from further commodity price weakness.
The broker’s gold price review has an impact on locally covered stocks, leading it to upgrade Lihir Gold (LHG) to Buy, High Risk with an increased price target of $3.79.
Oxiana Resources (OXR) has been upgraded to a Buy too (High Risk) with an increased price target of $4.20.
Junior gold miner Bendigo (BDG) was already rated Buy, High Risk and now sees its price target rise to $2.90 (up 7%).
Newcrest Mining’s target price has been lifted 2% to $30.59. The Buy, High Risk recommendation was left untouched.
US trading guru Dennis Gartman expressed the view in yesterday’s newsletter that the only way is up for the gold price. He cited several supporting factors such as the likelihood of Russian and Chinese central banks increasing the relative portion of gold in their reserves and further US dollar weakness, as well as technical indicators.