Gold News

Spot gold unmoved as stocks and bonds sell-off on Fed minutes

Gold bullion prices held steady late on Wednesday despite the latest Federal Reserve policy minutes showing that officials may consider further Dollar interest-rate hikes necessary.

US stocks and bonds sold off hard on the news. Gold held at $676.50 per ounce, and traded steady against all other major currencies. (Click here for more on the Sterling price of gold bullion...)

"In light of the strong seasonal demand, pressure from oil and geopolitical concerns, gold prices could rise still further over the next month or two," reckons John Meyer, an analyst at Numis Securities in London.

In the gold futures market, Tokyo's benchmark Feb. '08 contract closed today just ¥2 higher at the equivalent of $681.91 per ounce.

Now the Osaka stock exchange – Japan's second largest equity market – is looking to launch an exchange-traded gold fund (ETF) to boost investment in the metal.

"Listing gold-linked ETFs in Japan will allow institutional investors more opportunities to meet their hedging needs, and may get more individuals interested in gold investments," reckons Masaaki Nangaku, chairman of the Tokyo Commodity Exchange.

A spokesman for his Osaka rivals say the gold ETF may have net assets of ¥3 billion to ¥5 billion – that's between $25 million and $42 million.

In India, however, where the country's first local gold ETFs were launched earlier last month, poor sales continue to dog these new "paper gold" investments.

Reports in the Mumbai press suggest that India – where private individuals bought one ounce in every five sold worldwide last year – has no appetite for complex trust arrangements that fail to give investors outright ownership of physical bullion. (Click here to read more about India's role in the global gold market...)

Looking ahead, gold is set to rise by nearly 80% by 2010 according to a "US financier", says Bloomberg.

"The leveraged buy-out firms, corporate raiders and I feel that gold is going to rise to over $1,000 an ounce over the next two to three years," says one Edward Pastorini.

Bloomberg reports that he is leading a group now bidding for South Africa's Gold Fields, the world's fourth largest gold miner.

In fact, take-overs and mergers such as Pastorini's rumored bid will only help to propel the price of physical gold higher.

Click here to learn why more money equals less gold for the global mining industry...

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

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