Gold is king, going by the strength of its price, which was trading above US$1,200 an ounce after getting a boost from Barrick Gold Corp's move to eliminate its hedge positions against declines in gold prices. Barrick is the world's biggest gold producer.
The company had sold forward its gold and as such, did not benefit from any increase the gold price. Barrick said its positive view on the gold price prompted it to accelerate the elimination of these contracts ahead of schedule.
Gold has risen close to 40% this year amidst US dollar weakness, central bank buying and investor interest in a low interest rate environment. The greenback has fallen 8.7% against a basket of six major currencies, while the US Federal Reserve has kept the federal funds rate at close to zero since December 2008.
Given the gains gold has seen this year, is there more upside for the precious metal? Analysts are still bullish with UBS AG saying gold may reach US$1,300 next year while Standard Chartered Bank raised its price forecasts for 2010 and 2011.
David Barclay, commodity analyst at Standard Chartered, believes the momentum in gold prices will continue although he expects a correction in 1H2010 when the greenback gains in strength as risk aversion returns.
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