Gold Prospects Remain Positive Despite Volatility in the Markets

The recent volatility in precious metals has given rise to many doubts about how gold prices will move in the coming future. For investors who are invested in this metal or who propose to increase their exposure to it, this is a critical consideration. The good news for these investors is that many experts are reiterating their positive outlook for the yellow metal in spite of recent price dips.

Klapwijk Predicts a Good Year for Gold

Philip Klapwijk, who heads the metal analytics at Thomson Reuters GFMS, announced his belief that gold is likely to average $1800 this year. He predicted that the precious metal may cross the $2000 mark at some point too. Taking the current volatility into account he also warned that it may go down to $1600 before its regains momentum and begins to climb later this year.

Increasing Supply of Gold

Klapwijk also pointed out that the supply of gold is on the rise after a long hiatus. Higher scrap sales is a contributing factor for the enhanced supply but an improvement in gold mine production is the main cause, he said.  The sustained increase in prices of the precious metal over the past decade has encouraged more exploration activities resulting in greater gold production.

Normally, greater supply would translate into lower prices but in the case of gold there is an anomaly. Klapwijk believes that gold’s special status as a strong investment commodity is responsible for the skewed supply- demand equation.

Gold Valued as a Good Store of Value

Perhaps the common view among the investing public that gold is a strong store of value contributes to its sustained growth even when other metals are not performing as well. As the uncertainties in the Eurozone continue to overshadow the Greek swap success and other positive happenings, investors are finding it difficult to fully regain confidence in currencies or paper assets.

The growing fear that other Eurozone countries such as Portugal may go the Greece way is only adding to the confusion here and keeping currencies subdued. Irrespective of whether these fears do come true, it appears that gold has enough support from various happenings around the world to keep it growing price wise.

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