Highly respected metals consultancy GFMS expects gold prices to range between $750/oz and $1 080/oz 
in 2009, executive chairperson Phillip Klapwijk said in Toronto last week.

The consultancy published its latest market report, ‘Gold Survey 2008 – Update 2’, in which it argues that risk aversion and a desire to preserve wealth will be the main force behind the expected surge in gold investment demand.

The top end of the forecast range 
would imply a new high for the metal, which Klapwijk said would not surprise him.

Although the global economic downturn would have negative implications for fabrication demand for the metal, he suggested that gold’s “competition” for investors’ attention – stocks and bonds – would probably have an even worse time of it over the next few months.

The metal reached an all-time peak price of $1 023,50/oz in March last year, but was trading at about $817/oz last week.

GFMS is forecasting an average gold price of $915/oz in the first six months of the year, compared with an average price of $871,96 recorded last year.

Klapwijk said that he expects that a weakening US dollar and pressure on global stocks will boost gold investment, and reverse some of the selling that has taken place over the last couple of months, when investors’ need to cover losses elsewhere had prompted widespread liquidation of gold holdings.


The economic stimulus and rescue measures being taken by governments, and the US, in particular, would likely boost gold’s attractiveness, and high levels of financial uncertainty, particularly as inflation concerns begin to simmer over the course of the year, will mean that investors increasingly favour hard assets like gold, Klapwijk said.

“The economic outlook is pretty positive for gold invest-ment,” he said.

Implied net investment rose 20% in 2008, to 219 t, according to GFMS figures, and is expected to jump 89,4% year-on-year in the first half of 2009, to 388 t.


However, high and volatile prices, plus the slowdown in world gross domestic product growth, were forecast to cut jewellery demand by 11% in the first six months of this year.

Klapwijk added: “An 11% drop may sound restrained to some but demand 
in the first half of last year was fairly 
feeble and the actual tonnage we’re pro-posing for this year could easily be a 
20-year low.”


Jewellery offtake was also estimated to have declined by 11% in 2008, chiefly owing to the damage from high and volatile prices, especially in the developing world, and the slide into recession in many countries, in particular, the US.

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