Short-term trend has gold in `holding’ price pattern

It’s difficult to be bullish these days about the price of gold, which seems to have settled into the $440-$450(US) per oz range. In fact, the precious metal, which in May seemed on its way to the $500 mark, may even fall further in price during the next few weeks, warns one Toronto analyst.

“I think gold is doing very well,” Frank Clifton, vice-president of McDermid St. Lawrence, said when asked about the current price of gold and its relatively static price range. Nevertheless, he feels that in the next two or three weeks, with the U.S. dollar continuing to experience difficulties and inflation on the rise, the price could drop to $420.

According to Mr Clifton, the time interval between price “peaks” is six-to-nine months, the suggestion being that the next “run” on gold is several months away. “What you need most in this business is patience,” he said. Thomas Komlos, a mining analyst with Dean Witter Reynolds (Canada), sees the price of gold turning higher going into 1988, in pace with slowly rising inflation.

Pointing out that the price of gold is currently depressed overseas, he said that if gold is able to average $425 in 1987, it might rise as high as $450 next year. (The London final gold price averaged approximately $368 in 1986; to mid-June of this year, the price has been averaging about $428.)

Perhaps not surprisingly, other precious metals have seen their prices rise and fall. Silver, which hit a high of $11.25 this year, has of late been trading in the $7-$8 range. And platinum, which topped $600 earlier this year, has settled into the $550-$590 range. Influencing factors

When and if the price of gold begins to move, several factors could be involved, including the above mentioned weakened U.S. dollar and rising inflation. Also, a stronger oil price which would bring increased funds to those nations more likely to buy gold, troubles in South Africa and concerns about Third World debt could play a part.

Toronto forecaster Martin Murenbeeld is among those not looking for gold to rise in the near term, although he remains bullish for the long term. He cautions about inflation, however, which is turning up in all major countries. “The U.S. is extremely unlikely to allow the dollar to rise and/or to tighten policy which could nip this creeping inflation in the bud,” he writes in a recent release.

Also bullish in the long term is The International Investor, which recently wrote that “our visceral feeling” is that gold “will escalate above $700 within 18 months.”

For the short term, at least, gold prices seem to be in a “holding” pattern. One firm, First Marathon Securities, has even gone so far as to suggest (see story, Page 15) that in the near term the action may be more