Thursday, May 14, 2009

Today in Gold: Thursday, May 14

Each weekday, Cash4Gold will troll through the web's gold banter and post some of the bigger or more interesting stories. Following is a run-down of today's features:

"US gold ends higher on weak dollar, inflation fear"
Author: Frank Tang

Main Points: Gold for June delivery finished today at $928.40 an ounce, up $2.50 since the prior session. The modest drive was driven largely by a weakened dollar and down stock market.

Reuters cited Tom Pawlicki of MF Global as saying that gold could soon reach $970 an ounce based on signs that commodity investment is reaching a "fever pitch."

Analysis: Other than a $1.40 drop on Monday, it's been a good week for gold. Spurned by positive movement on Tuesday, Wednesday and today, gold is currently up $13.50 for the week.

"HSBC raises 2009 gold forecast to $875 from $825"
Author: Felix Salmon

Main Points: HSBC raised its 2009 projection for gold from $825 to $875 an ounce, citing inflation fears.

"Inflation fears are supporting gold," said James Steel, HSBC chief commodities analyst. "Possible USD weakness remains a potential source of support. Stagnant mine output, reduced official sector sales, and robust ETF and retail demand are also supportive factors.

Analysis: This report is somewhat confusing considering the average price of gold for 2009 is currently beyond $875 an ounce, and HSBC cites an expected environment through the balance of 2009 that will favor gold. If the environment will favor gold (and the price is currently hovering around $925 an ounce), isn't $875 a bit conservative? Somewhere in their projection, there should be an explanation that the price will dip below $875 (and why) and then balance out to $875 for the year. Otherwise, the projection isn't supported by their explanation.

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