Gold prices 'to hit $900 per oz next year'

RBC Capital Markets, the corporate and investment banking division of Royal Bank of Canada, claimed yesterday (November 13th) that the gold price will have a strong rally in the first half of 2009.

The bank - which posted revenue of CAD$20.6 billion in 2006 - held its annual gold conference in London, with a number of prominent figures addressing the gathered senior industry executives.

One of those was Stephen Walker, head of global mining research, who expressed his belief that despite recent falls, he expects the gold price to break through the $900 per ounce barrier next year.

He said: "While we recently lowered our expectations for gold prices over the next few years, as the global economy slows, we remain very positive on the outlook for gold."

"We believe that the gold market should begin to price in a recovery in the global economy and, with that recovery, an increase in inflation expectations, particularly given the enormous amount of monetary and fiscal stimulus being applied by central banks."

The view that the ongoing attempts to resolve the current economic malaise will ultimately benefit gold was also shared by RBC equity analyst Leon Esterhuizen.

He explained that a number of factors - such as a weaker US dollar, potentially higher oil prices and a struggling rand - provide "the most optimistic background for gold price appreciation in a very long time".

"The current financial crisis has delivered the perfect conditions for gold to rise over the next year or two," he added.

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