The fact is we have massively underestimated the impact of investment fund flows into the sector.
It would appear that the market is simply looking ahead to the tightness looming for later in the year.
It is unlikely that the physical market will suddenly assume a lead role. This means that price rises will again be strongly driven by investors.
Going into 2006, we maintain our positive view towards gold and note that prices have the potential to top $600/ounce in the course of this year, strongly influenced by the still massive funds floating around globally.
