Where Does Gold Go From Here?

SINGAPORE (Reuters) – Spot gold roared to an all-time high above $1,500 an ounce on Wednesday as a weaker dollar renewed interest in commodities, while concerns about a sovereign debt crisis in the euro zone lifted the metal’s safe-haven appeal.

Here are reactions to bullion’s fourth consecutive day of breaking records:

GNANASEKAR THIAGARAJAN, COMMTRENDZ RESEARCH

“It’s not just one or two factors at play, there are plenty of them fuelling this safe-haven buying. Gold would continue to rise to $1,520/1,525 and could face technical resistance there. Profit-booking is much needed now given the one-way rally that gold has seen.”

ANSHUMAN SHARMA, QUANT COMMODITIES

“After gold crossed $1,485, the markets looked set to try $1,500 and we saw that level today. At the moment it looks like this rally is not over. We will have to see as it is an unexplored area and will depend on whether traders decide to book profits or hold their positions.

“Indian demand should continue as people expect the prices to move higher from here.”

TETSU EMORI, ASTMAX CO

“Investors are focussing on gold’s nature as a safe asset and its universality, that it can be cashed anywhere at any time.

“Given that few countries in the world appear to be in a sound fiscal state nowadays, the focus is all the more put on safety, as reflected in the strength in gold not only in dollar but non-dollar currencies.

“Market price levels are less relevant now than in the past as investors are looking for what asset is relatively better than others, rather than looking at absolute levels and assessing whether their value is appropriate or not. The market has been rising steadily at a very good pace, neither overshooting nor plunging.

“Speculative positions are not as significant a factor as before, as ETFs are playing a much greater role, reflecting market consensus. Gold has further scope for an upside.”

DICK POON, HERAEUS

“There’s not much profit taking right now. Buying is ongoing, which seems to come from investors. We don’t see much selling back in the (physical) market.”

JONATHAN BARRATT, COMMODITY BROKING SERVICES

“In a word, sensational. Everything’s feeding into this — sovereign debt, the weaker dollar, inflation and investment demand. It is unusual to do it in Asian time. It goes to show how much appetite there is in Asia for bullion.

“We often see a $20 rally after breaking a big number, then a pullback. We will see what Europe and United States do with this — $1,510 or $1,520 look possible, but prices are starting to look a little stretched up here.”

MASAYO KONDO, COMMODITY INTELLIGENCE LTD

“In the near term, to the end of April, gold is expected to undergo a correction to as low as $1,400. Speculative positions have been accumulating, so funds are likely to unwind their longs for now as a key milestone of $1,500 is reached.

“Over the long term, gold will be underpinned by concerns about sovereign debt in Europe, not in the U.S., as they await the result of the stress test on banks in such countries as Portugal, Spain and Greece at the end of June. Concerns about banks’ health could prompt investors to seek alternative investment into gold.

“Chinese demand may wane as the government keeps raising interest rates, luring money away from gold, which doesn’t yield interest. Gold is solid, but its upside will be limited, with the core around $1,500.”

DARREN HEATHCOTE, INVESTEC AUSTRALIA

“There’s not a great deal of reasons to sell it at the moment, apart from concerns that there are a lot of longs in the market and there is a risk of sell-off at some point.

“The market is so fickle at the moment and it wouldn’t surprise me if we saw a sell-off. For the short term, it will play with current level and wait for direction.”

LI NING, SHANGHAI CIFCO FUTURES

“We’ve seen gold rally rapidly in the short term, and may see some small correction coming. But the 10-day moving average around $1,480 should be a strong support level. Investors are still very worried about rising inflation globally, even as some governments have taken various measures to fight rising prices.

“Concerns about debt problems in developed economies heightened after Standard & Poor’s threatened to downgrade the U.S. credit rating. As a result, gold will remain well supported in the medium term as investors seek a safe haven to park their value. In the second quarter gold may test $1,550, but beyond this quarter changes in monetary policies will lead to uncertainties in prices.”

YINGXI YU, BARCLAYS CAPITAL

“The environment does seem to have changed to a more gold-positive one, on the back of S&P threatening to downgrade the U.S. credit rating.

“Already we see increasing investor interest in gold, backed by a lot of uncertainties in what’s happening in the North Africa and Middle East region, Japan’s earthquake and its ultimate impact on the Japanese economy as well as increased risk to global economy arising from policy decisions as well as high oil prices.

“The investment sentiment will remain favourable. That should keep gold well supported at high levels. We always look at a pretty high level of speculative lengths, relatively to overall open interest, anyway.

“It doesn’t mean prices will have to sell off. Sell-off is not a direct consequence of high speculative net lengths.

“It does suggest that when the sentiment turns, prices can correct quickly. But at the moment, it does seem like the external environment should stay pretty good.”

(Reporting by Rujun Shen, Nicholas Trevethan, Chikako Mogi, Lewa Pardomuan and Siddesh Mayanker; Editing by Himani Sarkar)

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