“Market fundamentals and investor demand will drive gold to new record highs.”

Aug.11, 2008 in Market Outlook

Is the party over?
The sharp declines in metals prices was mostly “predicated on the sharp reversal in oil and on the turn upward in the greenback, but the underlying theme remains the rotation out of commodities by index and hedge funds,” said Nadler.
“The party is at a point where the lone couple now dancing to the light of the mirrored ball is doing so without any musical accompaniment, and risks falling over from fatigue,” he said.
But David Beahm, a vice president at Blanchard and Co., said that while commodities across the board have been struggling to find a bottom lately, “Blanchard remains bullish due to the fact that tangible assets are assets which perform well during periods of a slowing economy and higher inflation.”

In the longer term, Beahm said in emailed comments that “market fundamentals and investor demand will drive gold to new record highs.”
Indeed, “gold looks increasingly oversold,” said Mark O’Byrne, a director at Gold and Silver Investments Ltd. “This is especially the case as there appears to again be strong physical demand internationally at these levels, especially from the Indian subcontinent.”
There is significant physical demand at these levels as stocks are scarce and premiums high ahead of the first festival of the Indian buying season, the Raksha Bandhan festival, O’Byrne said in an email, citing a report from Reuters.

“As usual, the Indian subcontinent’s voracious appetite for gold imports should result in a floor being put under the gold market and mean that prices at the very least remain supported at these levels,” he said.

http://www.marketwatch.com/news/story/metals-stocks-gold-futures-drop/story.aspx?guid=%7B662287A7%2DE4E1%2D4384%2DB15A%2DD1F6294D255D%7D&dist=hplatest

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