Cape Town — The gold price is likely to average $674/oz this year but could range between $730 and $852 in the most optimistic scenario, global gold guru Martin Murenbeeld said.
Murenbeeld, who is chief economist of the Dundee Group of Companies, is well known for previous accurate predictions of the gold price.
He told the annual Mining Indaba conference that a number of factors were bullish for the gold price.
The dollar was likely to weaken as it was currently overvalued based on the US current account deficit of $850bn, and that downward adjustment could be by as much as 20%.
Currently dollar gold holdings around the world were excessive, at about $4,8-trillion, of which $2,6-trillion was held by Asian countries.
For those countries, gold was only 1,4% of reserves, compared with 15% held by the European Central Bank.
Although the Asian countries were unlikely to push gold holdings up to 15% of reserves, if they simply absorbed the 500 tons a year that were being sold by certain central banks, it would support the gold price.
The number of barrels of oil needed to buy an ounce of gold was now far lower than in the past.
With very high oil revenues, oil producers had excessive amounts of money and there was great pressure on them to diversify their assets.
Gold was cheap in comparison with other financial assets.