2008 Gold Price Prediction
So what about 2008?
In 2008, my minimum target is $925
based upon a continuation of the trends already in place and mentioned above.We could, however, see a spike to
between $975 and $1025
if, in addition,
1. The credit crisis escalates and the central banks are forced to inject substantially more "liquidity" into the financial system than anticipated; or
2. If tensions escalate to red alert status in the Middle East, or if a decline in U.S. presence in Iraq rekindles religious tensions, the bombings and violence in general (with the consequent effect on relations with Iran); or
3. Supply problems escalate in the physical gold market causing a gold crunch; or
4. If we get another major surprise like we did with the credit crisis in 2007 (Yes, something else could crawl from under the rock);
Note: There could be a sharp mid-year correction in the gold price, if we get a strong run-up from the $810 level in the early months of 2008. However, I believe, in the wake of such a run-up, support is likely to come in the current range or just below. Conversely, we could get an out-of-the-box price spike should we see three or more of the events mentioned above converge with their full ill-effect upon the economy and financial markets. These are indeed dangerous times, more dangerous than at any time since the gold bull market began.
Reflections in a golden eye I would be remiss as a commentator on the gold scene if I neglected to mention the rehabilitation gold has experienced in the public consciousness, not just in the United States but on a global basis. Gold is moving into the mainstream as an evergreen portfolio item, and this will prove to be a very important market development as we move into 2008. To some extent, this rehabilitation has been by default. Washington and Wall Street simultaneously have suffered declines in the public perception for well-known reasons - a situation from which gold has directly profited.
The real benefits to this change of thinking have yet to be realized, and are likely to play out over the long term. As investors make the connection between central bank money creation globally and its ultimate result, price inflation, so too they will make the connection between gold ownership and portfolio safety. It used to be that the same tone set in New York's gold market on a daily basis was the tone that carried through to overseas trading for the rest of the day. That scenario has changed dramatically. Now, it is not unusual to see gold begin a strong move in Asia overnight only to be carried over to the New York session.
This role reversal suggests a global undercurrent in the gold market that wasn't present even a year ago, and should be taken into consideration by all gold investors. There is now genuine worldwide competition for the available gold supply.Some might say I am pressing my luck by publishing a prediction for the 2008 gold market after calling the gold price in the three previous years, and I truly did consider, and mentioned to friends, clients and staff, that this year I might rest on my laurels. However, the trends which have pushed gold to the levels we have all enjoyed over the past several years are even more firmly in place now than they were at any time since 2004. Thus, I am emboldened and find myself in my traditional place this time of year. . . .out on the limb.
***As always, anyone who trades on these predictions does so at their own risk. There is as much chance I will be proven wrong as right. Those who are buying gold for long term asset preservation, though, pretty much view the prediction game for its entertainment value.
Last, consider this:Given the perspective of 100 years from now, analysts might very well find currency inflation the common source for the rise in both the Dow and gold during their respective up-cycles. If currency inflation could take the Dow from 800 to 11,750 during its bull market, why couldn't it take gold from its $270 starting point to $4050? If gold were to achieve a price of $4050, it will have matched the roughly 1500% appreciation of the stock market during its bull phase. That makes the current price an attractive entry level.
Source : Goldseek
Labels: Analysis
GENERAL MARKET CONDITIONS
Last Friday we had mentioned that traders will either square off or go long in precious metals and energies, we were right. Volumes this week will fall and trading will be volatile. Window dressing by fund managers along with position building for the first quarter of 2008, particularly in the options markets will dictate the markets. There is nothing new to comment and it will be technical trade for the rest of the week.
Crude oil floating over $90 a barrel as the year comes to a close. Crude oil has given the best return in 2007, which will draw more and more investor going long in crude oil. I am skeptical about rise in crude oil prices after August 2008. The reason, 2008 is US elections year and higher energy prices will become a political issue which could result in speculators cutting some of the longs in crude oil ahead of the US elections. Unless there are major hurricanes in the Gulf of Mexico in 2008, we remain bearish on crude oil before US presidential elections. I did rather take a chance and buy some puts between July and November 2008.
Emerging market stocks like India had a great and memorable 2007. This will continue into 2008. However it will not be a one way traffic like 2007. There will be some fluctuations. India stock markets and India companies will benefit from interest rates cuts from other central banks as cost of funds decline. However the sectors which performed in 2007 may be the laggards in 2008. We prefer to buy interest rate sensitive sectors like Automobiles and others (apart from infrastructure) for 2008 as lower global interest rates and lower commodity prices will benefit them. Apart from interest rate sensitive stocks, agro - commodity stocks (apart from sugar) is also a good long term investment as higher prices are here to stay.
GOLD -- FEBRURY FUTURE
Gold has to break $825 for gains to $848, else it will fall to $808 and $798 once again.
NYMEX CRUDE OIL -- FUTURE
Crude oil needs to break $95 else it will fall to $90.50 and $88.90 once again. As long as crude oil floats over $90.50 downside will be limited.
Labels: Analysis
GENERAL MARKET CONDITIONS
Year end profit taking and abating fears of a recession in US economy has resulted in US dollar gains and fall in crude oil prices and precious metals prices. Medium term to long term bullishness for precious metals as well as crude oil, medium term bearishness is there for the US dollar too. In the short term there could be more gains for the US dollar and pains for precious metals and base metals. These are all a part and parcel of year end closing. 2007 has been an exceptional year for every market and 2008 will be another dream year. Wheat prices reaching $10 a bushel, inflation is here to stay and gold's demand as an inflation hedge will remain.
2007 has been the year of mergers and acquisitions and leveraged buy outs (LBO's) at very high valuations. In 2008 if any of the M&A and LBO give negative returns to the investors, global stock markets will move into another round of bear rally which will be long lasting. I will be keeping a close watch on these stocks as valuations were on the higher end.
SILVER -- MARCH FUTURE
As long as silver holds $1338-$1354 zone in short term, downside will be limited. It needs to break $1422 to resume its weekly bullish zone.
NYMEX CRUDE OIL -- FUTURE
As long as crude oil holds $90-$90.40 downside will be limited and it will target $94-$95.50 once again. Falls below $90 then $87.40 is the target. Investor should sell April/May futures on rise with a price target of $78.
Source : Goldseek
Labels: Analysis
GOLD SUPPORT
$781.30, $784.40, $790.20, $795.30
GOLD RESISTANCE
$804.70, $809.50, $812.30, $819.70
GENERAL MARKET CONDITIONS
Three things which so far has yet to happen in 2007, gold has yet to break $850, crude oil has yet to break $100 and euro/usd has yet to break 1.50. Gold and crude oil still have a chance to edge past these markets despite technical bearishness, while euro/usd over 1.50 in the next two weeks is highly unlikely. As far as metals markets are concerned, it is base metals which will be remembered than precious metals as they created historical highs in 2007 only to crash subsequently. It started off with copper, followed by nickel, zinc and lead. Fundamentally, I have never been a base metal bull and my reasoning is that if global growth is to slow down in 2008.
A slowdown in 2008 is getting factored in for base metal prices and when liquidity conditions improve (probably after the first fortnight of January, 2008) base metals will find buying interest. At the moment, in our view there are still huge longs in copper, zinc and lead at higher levels and retail investors are trying to average and get out of their investment in base metals. Once this is over, base metals will consolidate. Please remember that base metals are still way high over 2004 lows. So base metals are still in their multi-year bull cycle. Interest rate cuts by various central banks globally in the second half of 2008 should support base metals. US economy will grow very strongly in the second half of 2008 on lagging effects of interest rate cuts and a weaker currency while the European central bank should start their interest rate cuts after June 2008. Even the Indian central bank should cut interest rates by half a percent in 2008 as inflation falls below acceptable levels.
The volatility in the first fortnight of December, is just preparing traders for things to come in 2008. Day traders are having hell of time as higher volatility means more trading opportunities. Technically gold and silver are in a neutral to bearish zone while crude oil is in a neutral zone. Euro/usd has to break 1.4674 to be in bullish zone while failure to edge past this week will result in fall to 1.41. This is last trading week Christmas and trading volumes will fall from next week as some traders jet off for vacations.
GOLD
Double bottom has been formed at $776 and a double top at $818. Gold will trade in wider $790-$814 range for the day. A breakout is in the offing from the current trading range soon.
NYMEX CRUDE OIL
As long as crude oil holds $90-$90.40 downside will be limited and it will target $94-$95.50 once again. Falls below $90 then $87.40 is the target. Investor should sell April/May futures on rise with a price target of $78.
Source : Goldseek
Labels: Analysis
Crude oil demand growth will jump by 2.1m barrels a day in 2008 as strong Middle East consumption will offset the US economic slowdown and the impact of record prices, the International Energy Agency (IEA) said on Friday.
The revised forecast is about 200,000 b/d higher than last month’s IEA estimate of a growth of 1.9m b/d and it is significantly higher than the Organisation of the Petroleum Exporting Countries’ (Opec) own calculations of growth of just 1.3m b/d.
Opec, the oil cartel which controls 40 per cent of the world’s oil supply, last week rejected an official increase in its production ceiling, warning that demand could be lower than forecast because the impact of the credit squeeze.
However, the IEA, the western countries’ energy watchdog, said that higher output from some Opec countries, such as Iraq, Angola and the United Arab Emirates, would boost the cartel’s real output in December in spite of its decision to leave its official production ceiling unchanged.
“Overall, winter prospects have clearly improved,” the IEA said, “but $90 a barrel oil makes clear that the market is still on edge and is unlikely to relax until the peak weather risks have subsided and a clear trend in Opec supplies is apparent.”
Crude oil prices in New York and London in early morning trading were higher. Nymex West Texas Intermediate crude oil was 48 cents up to $92.73 a barrel while ICE Brent crude oil jumped $1.28 to $93.40 a barrel.
Crude oil prices have been trading in a range of between $85 and almost $100 a barrel since October and hit an all-time high of $99.29 a barrel in late November. High oil prices coupled with rising food cost have boosted inflation around the world.
The IEA said that high oil prices were depressing only marginal demand growth in developed countries, such as the US or Germany. Consumption among rich countries will rise 1.3 per cent next year, it said.
However, in developing countries, the watchdog said that demand would grow 4 per cent in 2008 led by strong economic growth in China, the Middle East and India.
In addition, “most of the largest and fastest-growing emerging countries cap end-user prices, thus insulating consumers and fuelling strong oil demand growth,” the IEA said in its monthly oil report.
The jump in consumption in 2008 will force Opec to pump more than initially forecast or to draw down inventories as non-Opec supply is expected to grow by only 1m b/d. In spite of the gap between demand and non-Opec supply, next year’s increase will be an acceleration from 2007’s meagre growth of 0.5m b/d.
Crude oil and products inventories have already fallen below the 5-year average, the IEA said. In October, the inventories equalled 52.6 days of demand, down from 55 days during the spring and 54 days in the summer.
Labels: News
