By Halia Pavliva
June 3 (Bloomberg) -- Gold has resumed its typical
connection to the dollar, a signal that the metal is heading for
further gains as the currency slumps, said analysts at Barclays
Capital, Heritage West Futures Inc. and BNP Paribas SA.
“With the inverse relationship between gold and the buck
back in vogue and the year’s steepest monthly dollar decline in
May, gold prices are poised to attack the psychological $1,000
level this week,” said Ralph Preston, a Heritage West commodity
analyst in San Diego. For most of the decade, gold rose when the
dollar fell, based on the 20-day correlation coefficient.
The CHART OF THE DAY shows gold’s dollar relationship
reversed at the end of January, as the metal began moving in
tandem with the U.S. Dollar Index. Global financial turmoil
spurred investors to seek safe-harbor assets, including gold and
the greenback, Barclays said. By mid-March, markets were
stabilizing and gold returned to its usual tie to the currency.
“Gold has recently reverted to following its inverse
correlation with the dollar, after the relationship had weakened
earlier this year, due to safe-haven buying becoming a more
important factor in driving gold prices,” Barclays analysts
said in a note on May 29.
Gold probably will trade at $1,200 an ounce by the end of
the year, Preston said yesterday, adding that he expects the
metal to climb to $1,050 an ounce in a month. Andrew Chaveriat,
a Paribas analyst, said in a report yesterday that the metal may
top $1,020 within a week or two. While the dollar has dropped 12
percent since March 10, when the currency and gold resumed
heading in opposite directions, the metal climbed 9.9 percent.
“Over the forthcoming months, beyond short-term
corrections, investor sentiment remains positive, and a weaker
dollar combined with expectations for a build in inflation are
likely to spur investors to increase their exposure to gold and
allow prices to gain upward traction,” Natalya Naqvi, a London-
based analyst at Barclays, said June 1 by e-mail. Barclays
technical analysts forecast gold to climb to $1,033 and as high
as $1,200 in the medium term, a report e-mailed yesterday shows.
Source: BLOOMBERG News (BN) Date: Jun 2 2009 19:00:01
By Halia Pavliva
June 3 (Bloomberg) -- Gold has resumed its typical
connection to the dollar, a signal that the metal is heading for
further gains as the currency slumps, said analysts at Barclays
Capital, Heritage West Futures Inc. and BNP Paribas SA.
“With the inverse relationship between gold and the buck
back in vogue and the year’s steepest monthly dollar decline in
May, gold prices are poised to attack the psychological $1,000
level this week,” said Ralph Preston, a Heritage West commodity
analyst in San Diego. For most of the decade, gold rose when the
dollar fell, based on the 20-day correlation coefficient.
The CHART OF THE DAY shows gold’s dollar relationship
reversed at the end of January, as the metal began moving in
tandem with the U.S. Dollar Index. Global financial turmoil
spurred investors to seek safe-harbor assets, including gold and
the greenback, Barclays said. By mid-March, markets were
stabilizing and gold returned to its usual tie to the currency.
“Gold has recently reverted to following its inverse
correlation with the dollar, after the relationship had weakened
earlier this year, due to safe-haven buying becoming a more
important factor in driving gold prices,” Barclays analysts
said in a note on May 29.
Gold probably will trade at $1,200 an ounce by the end of
the year, Preston said yesterday, adding that he expects the
metal to climb to $1,050 an ounce in a month. Andrew Chaveriat,
a Paribas analyst, said in a report yesterday that the metal may
top $1,020 within a week or two. While the dollar has dropped 12
percent since March 10, when the currency and gold resumed
heading in opposite directions, the metal climbed 9.9 percent.
“Over the forthcoming months, beyond short-term
corrections, investor sentiment remains positive, and a weaker
dollar combined with expectations for a build in inflation are
likely to spur investors to increase their exposure to gold and
allow prices to gain upward traction,” Natalya Naqvi, a London-
based analyst at Barclays, said June 1 by e-mail. Barclays
technical analysts forecast gold to climb to $1,033 and as high
as $1,200 in the medium term, a report e-mailed yesterday shows.
Source: BLOOMBERG News (BN) Date: Jun 2 2009 19:00:01
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