By Jason Scott
April 1 (Bloomberg) -- Prices for gold are “probably at their peak” and may decline relative to other commodities, Westpac Banking Corp.
“The world deflationary spiral has and is currently keeping gold below $1,000 an ounce and I don’t expect it to get back above that, or not by much, for about two years,” Westpac Senior Economist Justin Smirk told a conference in Perth today.
Gold mining companies are looking to increase production as prices climb on investor demand for the precious metal as a store of value. Precious metals have benefited as some investors sought to protect their wealth and hedge against inflation as governments pumped more money into economies.
Gold is trading about 10 percent below last year’s all-time high of $1,032.70 an ounce. It gained 4.6 percent in the quarter ended March 31.
A weaker dollar is positive for gold prices, Smirk said.
Gold “will be outperformed by other rebounding commodities, which will move faster as economies recover,” he said. “Risk conditions have past their most extreme.”
To contact the reporter on this story: Jason Scott in Perth at jscott14@bloomberg.net
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