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Gold to rise above VND19 mln this year, says expert   2008-05-29 - ThanhNienNews

Gold prices fell sharply yesterday but a senior consultant at the World Gold Council told Thanh Nien Daily he believed the precious metal would move up by the end of the year.

Gold prices fell sharply yesterday but a senior consultant at the World Gold Council told Thanh Nien Daily he believed the precious metal would move up by the end of the year.



Huynh Trung Khanh forecast the price, which ended at VND18.20 million per tael (37.5 grams) at Saigon Jewelry Company after losing VND380,000 yesterday, would go past VND19 million in the last quarter.

Gold was quoted at US$893.70/894.70 an ounce by 10:07 GMT in London, down around 2 percent from the previous day.

“Accelerating inflation, which jumped to 25.2 percent in May from a year earlier, and the weaker dong saw local residents move to the traditional haven, pushing up the price,” Khanh said.

“I think the price will rise above VND19 million in the last quarter of the year, when the demand for the precious metal will rise on traditional holidays.”

The sharp fall, which unraveled rises above $910 earlier in the day, came as oil prices turned sharply lower, adding losses of close to $2.00 to the already steep $3.34 fall on Tuesday.

“Oil prices fell and therefore all commodities fell, too,” said Yukuji Sonoda, precious metals analyst with Tokyo-based Daiichi Commodities.

“The price of gold fluctuates with oil prices these days, and it is very difficult to predict.”

Front-month US crude for July delivery CLc1 was down $1.83 at $127.02 by 08:34 GMT, having fallen earlier to $126.55.

Investors use gold as a hedge against inflation, making bullion’s moves closely intertwined with changes in oil prices.

Putting a floor under the fall in gold prices, the dollar edged down in afternoon Asian trade, slipping as oil prices steadied.

The dollar index was down 0.17 percent at 72.265 by 08:41 GMT, erasing earlier gains.

Investors awaited the release of US economic data later in the day, including the mortgage market index and durable goods orders, which could influence the dollar.

“Investors will likely remain cautious ahead of the release of these statistics, which might further fuel dollar weakness today,” Standard Bank said in a daily market report.

A weaker dollar makes gold cheaper for holders of other currencies and often lifts bullion demand.

In supply news, China, the world’s second-largest gold producer last year, is expected to surpass South Africa and become the world’s top producer in 2008 as it raises output from 270.5 tons to 300 tons, an executive at industry group the China Gold Association said Wednesday.

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