Resource Capital Research (RCR) predicted that returning stability to the US dollar will see gold trading steady to prices of around US$950 to $1000 per ounce for the rest of 2009.
The equity research firm released these forecasts in its Equity Research Report on junior and mid-tier gold companies on Friday, saying that inflation fears, although premature, may well push gold prices above the $1000 mark in mid-2010.
Gold has surged 10% since early July to the near record levels of around $1,025 per ounce and in recent weeks has fluctuated between $980 and $1020 per ounce.
Gold prices closed at $1017.80 per ounce on 5 October, rising by $13.50.
According to RCR Senior Gold Analyst Dr Tony Parry, the rising gold price had been driven by the weakness of the US dollar over the past three months.
“This hasn’t helped Australian or Canadian producers, whose currencies have appreciated,” he said. “Nevertheless, gold equities have performed well and money is flowing into the sector.
“We expect to see gold trading between $950 and $1,000 per ounce for the rest of 2009 with some stability returning to the US dollar.”
Parry believes that market fundamentals will ensure that $1500 or $2000 per ounce scenarios will not eventuate.
The firm believes there is more risk that prices will break below the $950 per ounce mark than above $1000 for a sustained period over the next six months.
The report also found that gold share indices are typically 30 to 40% above September 2008 levels, while the Morgan Stanley World Index is still 6% below September 2008 levels.
Gold shares have also outperformed in the last month with gold around $1000.
Money is flowing strongly into the junior end of gold share markets, with many gold companies undertaking equity raisings, the firm said.
The report covered 15 gold exploration and development companies.