Gold May Rise Near 15-Year High as Dollar Falls, Survey Says

Gold may rise close to a 15-year high on speculation a falling dollar will make the precious metal cheaper for buyers holding euros, a Bloomberg survey showed.Twenty-three of 48 traders, investors, and analysts surveyed from Sydney to New York on October 21 and October 22 advised buying gold, which is sold in dollars. Twelve recommended selling the metal, and 13 were neutral.Gold reached a six-month high of $427.50 an ounce last week, led by a drop in the dollar, after a government report showed the slowest pace of foreign purchases of American stocks and other investments since October 2003. The report increases concern that America won’t attract enough capital to fund a shortfall in trade and investments, eroding the currency’s value.“The dollar is definitely the immediate driver for gold prices,” said the chief executive of Canadian gold producer Goldcorp Inc., Robert R. McEwen. “The big thing that’s driving gold is the amount of debt that’s in the system, the overextended nature of the economy, the reliance on foreign capital to finance our lifestyle.”Gold futures for December delivery rose 1.3% last week to $425.60 on the Comex division of the New York Mercantile Exchange, the sixth gain in the past seven weeks. The metal reached a 15-year high of $433 on April 1. A futures contract is an agreement to buy or sell a commodity at a specified price and date.The majority of gold investors and analysts correctly forecast the market’s direction 14 times in the 27 weeks since the debut of the Bloomberg survey.Toronto-based Goldcorp stockpiled almost a third of its output in the third quarter, betting bullion prices will rise, Mr. McEwen said. Withholding sales led to a 58% drop in earnings for the period. The company expects to hold back a similar proportion in the fourth quarter.Gold may reach $450 before the end of this year, $500 an ounce next year and $850 over the next six years, said Mr. McEwen, 54. The widening American trade gap is eroding the dollar and making gold more appealing as an investment, he said.Foreigners in August bought a net $59 billion of Treasuries, stocks, corporate bonds and other securities, down from $64 billion in July, the Treasury Department said October 18.America needs about $1.6 billion a day in foreign capital to plug its current-account deficit, which grew to a record $166.2 billion in the second quarter as higher prices for imported oil contributed to a wider trade gap.

Gold May Rise Near 15-Year High as Dollar Falls, Survey Says

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