The price of gold could reach US$480 a troy ounce during the first half of 2005 if the euro strengthens to $1.39 in the same six-month period, investment bank Merrill Lynch said in a report issued this week.
The bank sees gold averaging $440/oz in 2005, with the metal trading in a range between $400/oz and $480/oz.
At 11h30, gold was quoted at $422.90/oz, up $1.05/oz from the metal's previous close of $421.85/oz, and the euro was quoted at $1.2989 from the European unit's late trade in New York on Thursday of $1.2964.
The major factors for the higher gold price in 2004, low US interest rates and a weakening US dollar, are expected to play an equally important role in 2005.
"Higher price objectives are possible if the up trends in the non-US dollar prices of gold continue, something we would not rule out," Merrill Lynch said.
Another driver for gold in 2005 is likely to be the improving supply and demand fundamentals for gold.
Few new gold projects are being constructed and Merrill Lynch estimates that world gold output could decline by as much as 10% by 2006 from 2003 levels of gold production.
Source: Business Day
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