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26-02-2012, 09:04 AM
The Straits Times
Feb 26, 2012
Chasing the pot of gold
Some analysts expect price of the precious metal to rise further
By Melissa Tan , Gan Yu Jia
The goods and services tax (GST) on the import and supply of investment-grade gold will be lifted on Oct 1, effectively making it 7per cent cheaper overnight.
The move, announced by Finance Minister Tharman Shanmugaratnam in his Budget 2012 speech on Feb 17, is meant to spur the development of gold trading here.
But is it the right time for retail investors to buy gold?
Analysts largely say they expect the price of gold to go up this year, though their predictions vary.
The price of gold has risen 15 per cent since the start of the year and currently hovers at around US$1,780 an ounce after touching a record high of above US$1,900 in the second half of last year.
Mr Christopher Wyke, commodities and currencies product manager at Schroders, thinks that gold prices will rise to as high as US$2,250 by the end of this year.
'We won't be surprised by the end of this gold bull market, which I think is five to eight years away, to see a price close to US$5,000 an ounce,' he said.
He recommended that investors allocate between 5 per cent and 25 per cent of their portfolios to gold.
But other experts had a more cautious outlook.
Mr Avtar Sandu, senior commodities manager at Phillip Futures, said he does not expect gold to appreciate beyond US$1,800 per ounce this year.
Mr Nick Trevethan, a senior commodities strategist at ANZ, thinks that the price of gold will rise to US$1,850 by the end of this year.
He noted that 'the bull market in gold is going to last for as long as interest rates remain low around the world, for as long as retail investors are concerned about the quality of paper assets, and for as long as central banks seek to add gold to their foreign currency reserves. That's a long time'.
Mr Robert Aspin, a senior investment strategist at Standard Chartered's group wealth management division, expects that the price of gold will reach US$1,975 by the end of this year according to the bank's research.
'There is a chance we may, in the next 12 months or so, see gold try to challenge the record high of US$1,920.'
In stark contrast, Fundsupermart general manager Wong Sui Jau believes that 'the bull market for gold reached its peak last year' and that the precious metal is overvalued.
'We will either see a flat movement for gold price at best, or even some correction in gold prices at worst.'
He said that while gold has posted positive returns for 11 consecutive years, traditional demand for gold has been falling.
'Also, contrary to popular belief, we do not believe that gold is a safe haven. Gold is become increasingly volatile over the years.'
Mr Trevethan noted that 'since the financial crisis... rising equities have tended to mean rising gold, and falling equities tend to mean falling gold. So that means gold is susceptible to a euro zone shock'.
Mr Vasu Menon, vice-president of wealth management at OCBC, added that even if prices do rise, 'the rise will not be in a straight line and pullbacks will take place intermittently when risk aversion sets in from time to time'.
melissat@sph.com.sg
yjgan@sph.com.sg
Feb 26, 2012
Chasing the pot of gold
Some analysts expect price of the precious metal to rise further
By Melissa Tan , Gan Yu Jia
The goods and services tax (GST) on the import and supply of investment-grade gold will be lifted on Oct 1, effectively making it 7per cent cheaper overnight.
The move, announced by Finance Minister Tharman Shanmugaratnam in his Budget 2012 speech on Feb 17, is meant to spur the development of gold trading here.
But is it the right time for retail investors to buy gold?
Analysts largely say they expect the price of gold to go up this year, though their predictions vary.
The price of gold has risen 15 per cent since the start of the year and currently hovers at around US$1,780 an ounce after touching a record high of above US$1,900 in the second half of last year.
Mr Christopher Wyke, commodities and currencies product manager at Schroders, thinks that gold prices will rise to as high as US$2,250 by the end of this year.
'We won't be surprised by the end of this gold bull market, which I think is five to eight years away, to see a price close to US$5,000 an ounce,' he said.
He recommended that investors allocate between 5 per cent and 25 per cent of their portfolios to gold.
But other experts had a more cautious outlook.
Mr Avtar Sandu, senior commodities manager at Phillip Futures, said he does not expect gold to appreciate beyond US$1,800 per ounce this year.
Mr Nick Trevethan, a senior commodities strategist at ANZ, thinks that the price of gold will rise to US$1,850 by the end of this year.
He noted that 'the bull market in gold is going to last for as long as interest rates remain low around the world, for as long as retail investors are concerned about the quality of paper assets, and for as long as central banks seek to add gold to their foreign currency reserves. That's a long time'.
Mr Robert Aspin, a senior investment strategist at Standard Chartered's group wealth management division, expects that the price of gold will reach US$1,975 by the end of this year according to the bank's research.
'There is a chance we may, in the next 12 months or so, see gold try to challenge the record high of US$1,920.'
In stark contrast, Fundsupermart general manager Wong Sui Jau believes that 'the bull market for gold reached its peak last year' and that the precious metal is overvalued.
'We will either see a flat movement for gold price at best, or even some correction in gold prices at worst.'
He said that while gold has posted positive returns for 11 consecutive years, traditional demand for gold has been falling.
'Also, contrary to popular belief, we do not believe that gold is a safe haven. Gold is become increasingly volatile over the years.'
Mr Trevethan noted that 'since the financial crisis... rising equities have tended to mean rising gold, and falling equities tend to mean falling gold. So that means gold is susceptible to a euro zone shock'.
Mr Vasu Menon, vice-president of wealth management at OCBC, added that even if prices do rise, 'the rise will not be in a straight line and pullbacks will take place intermittently when risk aversion sets in from time to time'.
melissat@sph.com.sg
yjgan@sph.com.sg
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