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January 09, 2006
Hedge funds drive Bullion to higher levels
With hedge funds investing heavily into the premium metal ‘Gold’ – the bullion prices have skyrocketed for the fifth consecutive year. Industry experts opine that this trend of bullion buying by hedge funds is expected to continue through 2006 as well. And led by this trend is the forecast of bullion prices reaching further north. For a sixth year in a row in 2006, the loosely regulated hedge funds are all set to buy the metal to diversify from stocks, bonds and currencies. According to median forecast of 29 analysts (including traders and investors surveyed by Bloomberg News), the price of bullion is likely to shoot up by about 18 percent, to average about US $525 an ounce, up from US $445 last year. Chicago Tribune reports:
Hedge funds and other speculators more than tripled their net long positions, or bets prices will rise, in New York gold futures in the past five months. Inflation, the U.S. budget and current account deficits, and the dollar led investors to buy gold. Investors are buying gold because it's outperforming stocks and bonds. Gold rose 90 percent in five years, while the Standard & Poor's 500 index returned 2.7 percent with dividends reinvested.
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