The only way is up as gold hits a high

Interview with Shaw and Partners WA State Manager Davide Bosio published in the West Australian.

The gold price has moved into uncharted waters after surging through $US2000 an ounce and hitting a fresh historic high.

The spot price was $US2035.06/oz ($2823.24/oz) late yesterday as a confluence of factors drove a flight to the safe-haven metal.

Investors are weighing the prospect of more fiscal stimulus by governments globally, and particularly in the US, as authorities look to counter the economic hit of the coronavirus pandemic.

Central banks are expected to keep interest rates at record lows for some time, stoking fears of inflation.

The fundamentals are playing out amid heightened geopolitical tensions, particularly be-tween global superpowers China and the US.

Bullion is up 33 per cent already this year on the back of the uncertainty.

Shaw and Partners WA State Manager Davide Bosio said the gold price had no resistance ahead of it and was in "new uncharted territory".

"I do think that $US2000/oz is important, and if gold can hold above these levels, I think we're going to see it really build from here," he said.

The gold price breached $US2000/oz well ahead of a forecast by Shaw and Partners two months ago that it would hit the milestone in 18 months to two years.

Mr Bosio said he expected US President Donald Trump to try all means possible to stimulate the country's battered economy in the lead-up to the November presidential poll to boost his popularity, which he argued would also play well for gold.

Hartleys resources analyst Mike Millikan said trying to predict the gold price was a mug's game, however, the broker had updated its long-run price assumptions recently. "It feels like it could go higher, certainly in the near term," he said.

US investment bank Goldman Sachs is forecasting gold to hit $US2300/oz, while RBC Capital Markets puts odds of a price of $US3000/oz at 40 per cent.

Bloomberg noted real yields on 10-year Treasury bonds had collapsed below zero, hitting a record low below negative one per cent overnight on Tuesday.

Meanwhile, worldwide holdings in gold-backed exchange traded funds now stand behind only the official US reserves of bullion after they surpassed Germany's holdings this week.

The surging interest in the yellow metal has driven ASX-listed gold miners to multi-year and, in some cases, all-time highs.

Northern Star Resources closed up 4 per cent at $16.43 yesterday while St Barbara had rallied 5 per cent to $3.62, Evolution Mining lifted 4 per cent to $6.12 and Ramelius Resources grew 5 per cent to $2.21.

Mr Millikan said good-quality ASX-listed gold stocks were at a premium and he expected that to continue but for investors, finding value was key.

"If some-thing looks cheap, it won't stay cheap for very long if it's got some good quality assets behind it," he said.

Article source: The West Australian, 6 August 2020