Gold Prices Still On The Rise

Gold Prices Still On The Rise

Gold Prices Still On The Rise

According to a recent report released by Standard Chartered analysts, gold will reach $2100 per ounce by 2014, and nearly $5000 by 2020. China Mineral Company analysts agree that the gold run isn't likely going to end, but $5000 per ounce sees a bit higher than is probable.

Increasing demand for gold particularly in China and India will support the continuation of this run, and low interest rates in America will help to keep demand up internationally. Currently the international demand for the precious metal is far greater than the supply, and according to mining and gold extraction predictions, the world's mines won't likely outpace demand anytime in the next 3 years. Additionally, the cost of extraction is going up; particularly in Africa.

According to the Standard Chartered Report, a scenario exists where gold would likely reach $4,869 per ounce by 2020 based on the relationship between rising income levels and gold prices.

In a previous report, analysts had predicted that the average income per head in China and India would reach 30% of US levels by 2030. "Under this scenario, and assuming that the relationship between rising income levels and gold holds, gold prices could reach $4,869 by 2020," the report said.

On this basis, the bull run for gold could still be in its infancy. This is based on the assumption that the current relationship between gold and incomes persists through to 2020, which is considered possible, but unlikely.

Though the projection of nearly $5000 per ounce by 2020 seems a bit pie in the sky, China Mineral Company analyst Clark Paulson points out that there is some validity to the scenario.

"Though my belief is that gold will plateau around $1600-1700 in 2011, the increase in spending power in China and India could absolutely be enough to drive the price of gold well past $2000 per ounce by 2013. I don't see a likely scenario where gold could reach anywhere near $5000 per ounce, but that doesn't mean that their prediction doesn't have legs to stand on. The rationale behind that kind of run is sound; I just think the numbers are a bit inflated."

Regardless of how high gold goes, analysts are in agreement that the run isn't likely over.

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