Newspaper article THE JOURNAL RECORD

Analysts Feel Gold May Reclaim Glitter

Newspaper article THE JOURNAL RECORD

Analysts Feel Gold May Reclaim Glitter

Article excerpt

By David E. Kalish

Associated Press

NEW YORK _ Gold, the ancient horde of kings and pirates but a modern-day investment flop, may yet reclaim some of its fabled glitter.

Shunned by investors and dumped by central banks, the precious metal's price has plunged more 20 percent in the last seven years, earning little more than heartache for buyers hoping for riches.

But now there is growing speculation among gold watchers that prices may have bottomed out. While it's too early to call it a rally, a spurt in gold's price this week may signal an important change in sentiment.

In the past two days, gold for current delivery has jumped $5.40 a troy ounce to $337.60 in trading on the New York Commodity Exchange, its highest level in more than three months.

Analysts caution against reading too much into the recent surge and say the gold market has falsely raised hopes in the past. But what's attracting so much attention this time around is the source of the fresh money into the market: managers of funds invested in gold futures.

The fact that managers of these funds have taken a shine to gold has given a more permanent luster to the commodity's price rise than would a surge traced to speculators hoping to profit from a short-term price movement. These funds generally are the province of big, wealthy investors seeking longer-term gains.

"How significant is what happened yesterday? At this moment it's only speculation. But there are positives we haven't seen before," said Alan Posnick, a senior vice president with MTB Banking Corp.

The first significant signs of bullishness came earlier this year on a rally in stocks of mining companies, a trend that sometimes has been an important indicator of future rises in the metal's price.

So far this year, the value of gold company stocks has soared more than 20 percent on renewed investor faith in the metal's price. Among them, Homestake Mining Co. is up 30 percent and Newmont Gold Co. …

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