Why are experts forecasting that gold will be $1,000 sooner than expected?
"Gold prices on Friday jumped to a new all-time high above $920 a troy ounce as mining companies in South Africa, the world’s second largest producer, halted their operations because of acute power shortages.
Wall Street’s bets on further US interest rates cuts, the weakness of the US dollar and oil prices rising above $90 a barrel are also contributing to the rally in precious metal prices, traders in London said.
Spot bullion in London rose to a record of $921.30 an ounce, well above the peak of $914 an ounce set earlier this month.
Platinum also rose to an all-time high above $1,640 an ounce on news of South Africa’s production problems.
AngloGold Ashanti, Gold Fields and Harmony said they had stopped all gold mining after they were informed by state-owned power utility Eskom that it could not guarantee power supply to their operations in South Africa.
Miners have to suspend activity when there is a risk to a mine’s power supply, because they depend on it to pump water out of deep mines and provide ventilation.
South Africa last year lost its position as the world’s top gold producer, which it held since 1905, in favour of China where output has surged by 70 per cent in the last 10 years and 12 per cent in 2007.
South Africa’s gold output dipped 8 per cent to 272 tonnes in 2007, while China produced about 276 tonnes, according to the London-based precious metal consultants GFMS.
The Chamber of Mines in Johannesburg said in a statement that the decision to keep underground workers on the surface 'will have an impact on productivity as well as on operating costs.'
'It is not clear when the workers will resume their underground shifts,' it added.
Gold prices recovered in the last two trading days after hitting a three-week low below $850 an ounce. The price recovery was also boosted by positive comments earlier this week from investment banks Morgan Stanley and Credit Suisse, which raised their forecasts for average gold prices in 2008 to $950 an ounce and above $1,000 an ounce in 2009."