Russia » Economics
Author`s name Ольга Савка

Gold prices to hit all-time high

Gold prices grow owing to unstable dollar and high oil prices

Gold is becoming one of the most reliable object of investments. On October 1st prices on gold hit the maximum in recent five months - $421.9 per ounce. Bloomberg has recently conducted an opinion poll among experts, according to which the gold price can reach the $433 per ounce in the near future . If it happens, gold will set a maximum price in 15 years.

Twenty-seven of 44 traders and investors, who took part in the poll of the agency, said that the price on gold would grow according to the results of the current week. Gold prices have been growing for five weeks running already. Specialists say that such situation was registered only back in 1970. An ounce of gold may cost $480 at the end of the current year.

Experts explain such a growth of prices on the precious metal with two factors: the growth of oil prices and the unstable dollar rate. When prices on dollar-valued goods grow, market members start aiming at commodity assets investments. The rise on the market of gold has slowed down, but it is expected to grow again. Specialists say that the US dollar does not have a good perspective in the near future. The USA's state debt is said to grow according to financial results of the current year.

A lengthy setback in the gold-mining industry was registered during the period 1997-2002. The price on gold dropped down to $250 per ounce at that time, which ruined many gold-mining companies. The precious metal was valued at $360 in the summer of 2003. Such an increase was achieved owing to the growing interest in the gold-mining industry. The price on gold overcame the so-called psychological level of $400 in June of this year and reached the level of 1997 in September - $410 per ounce. The market of gold is currently experiencing a rise in prices.

Global gold reserves made up about 150.4 thousand tons by the end of 2003. Central banks and international financial organizations own 30,000 tons, 17,000 tons are used in the electronic industry and dentistry, 79,000 are used for the production of jewelry, and investment savings make up 24,000 tons. The Krasnoyarsk and Magadan regions, as well as the Yakutia republic are Russia's leading gold-mining territories. Commerce banks purchased all gold that was produced in the country.

Sergey Vasiliev, the director of the Irkutsk-based gold-mining company Vysochaishy, stated that the growing prices on gold was very good both to the Irkutsk region in particular and to Russia on the whole. However, Vasiliev said, the inflation rate should not surpass the pace of the gold prices growth.

Forecasters do not promise a continuing rise of prices on gold in a long perspective. Foreign specialists' opinions on the matter are quite contradictory. It is supposed that the price on gold will vary between $370-420 per ounce. The current market trend is connected with the reduction of the demand on gold – by about 250 tons a year. The gold supply, however, is growing along with the prime cost on gold mining. The gold mining prime cost made up almost $230 per ounce by the end of 2003, which was $40 as much as opposed to 2002.

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Tillerson must go!