MN: Gold closes 2008 in London at $865, up nearly 3 percent on the year
LONDON -
Gold closed the year at $865 an ounce in London as the LBMA announced its final fixing, It opened the year at $840.75. Thus the yellow metal recorded an increase of around 3 percent in a year where global stock fell by over 40 percent on average, confirming gold's status as at least a store of wealth in troubled times.
Silver fared less well over the year with a final fixing of $10.83 an ounce, down from $14.93 – a fall of some 27.5 percent – somewhat better than the general stock market decline, but perhaps rather disappointing in relation with gold which remains the principal driver of the silver price. This also affirms silver's tendency to rather more price volatility than its sister precious metal.
With gold and silver ending the year with something of a whimper, having been trading at over $880 and $11 respectively only a couple of days earlier investors may be a little disappointed, but year-end profit taking after a recent fairly sharp rise was largely responsible. A low oil price, back down below $38 a barrel for light crude probably contributed too, precipitating some fund outflows.
Looking ahead one remains cautiously optimistic on the gold price front. Inflows into gold ETFs has remained strong and the very fact that commentators will be pointing to gold as one of the few sectors to have recorded a year on year gain in value, however small this may have been, will raise its profile amongst the investing public. And a raised profile may engender additional investment interest in the year ahead.
Commentators are mixed on the prospects for gold and silver in the short to medium term. However looking to the potentially inflationary impact of all the economic stimulus measures put into world economies over the past few months and planned for the months ahead one would assess the precious metals outlook as being positive. While the extremely weak oil price may be limiting current inflation, one cannot expect the oil price to continue at the current level, particularly given the big OPEC production cuts planned for the New Year. A likely scenario would thus be for rising oil, gold and silver in the medium to log term.
