PERTH (miningweekly.com) – The gold price is likely to trade below $1 200/oz for the remainder of the year, an analyst at Sydney-based Resource Capital Research (RCR) predicted on Tuesday.

“We are moderately bearish on gold and expect trading mostly in the $1 150/oz to $1 200/oz band for the balance of 2010,” said RCR senior analyst Tony Parry.

He is forecasting an average price of $1 175/oz over the next five months.

Gold has continued to set new records in the June quarter, hitting an all-time high of $1 256,80/oz on June 18, driven by the words “crisis” and “banks” associated with the European debt fears.

“Take away the crisis mentality, and gold looks precarious,” Parry noted.

He said that currently, market analysing was not focused around fundamentals, but around market psychology and the predominance of a crisis mentality.

But, with further crisis momentum, the precious metal could continue to set more records, he pointed out.

“It’s not easy predicting the gold price when it is regularly breaching all-time highs, driven by crisis-related fear. However, looking at the fundamentals, we are cautious in the medium-term outlook.”

Overall, the gold price finished the June quarter with a 13% rise. In the twelve months to June 30, it was up by 34%.

RCR noted that since the start of 2008, gold has outperformed other major asset classes, appreciating by 49% while equity markets, the oil price, copper price were still in negative territory over that period.

“Gold as an investment has been head and shoulders above equities and commodities in the last two-and-a-half years, but we may have seen the peak in the precious metal’s golden years,” said Parry.

The researcher also stated that gold shares have significantly out-performed relative to overall global equity markets, but apart from the US gold index stocks, have actually underperformed relative to the US dollar gold price, owing to currency appreciation in Australia and Canada.

In the June quarter, the gold shares surged during a period of falling equity markets, and fared better than the US dollar gold price, partly owing to currency depreciation. The laggards have been the Australian gold shares, most likely affected by the resources super profits tax debate, which was recently resolved.

On that basis, Australian gold now looks oversold, RCR noted.

In the 12 months to June, the Australian gold index was up by 30%, Canadian gold share index up by 22% and the South African index up by only 11%. During that same period, world equities were up by 8%.

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