The momentum higher in gold continues. The consensus in the market is that gold will trade to between $600/oz and $800/oz in 2006. The asset relocation into gold continues.

There are good reasons to expect gold to keep its momentum on the way higher. If you look at the fundamental reasons that helped gold to move higher last year and this year, I think most of them are still in place.

The market took on some new positions ahead of the Fed. After they raised, as expected, gold came off, but there is support now around $565/566.

We expect gold to remain very volatile, trading erratically from time to time and to break over $600/oz during the course of 2006. We would not exclude several short-lived double-digit rallies to surprise the market during the same period.

The factors that fed the upside momentum over the last few months are unchanged and should continue to be supportive for gold.

The recent price consolidation...has built a very solid base for a move higher.