Analyst's Corner: Gold To Go Sideways

Gold prices, which rose dramatically last year and reached a 25-year record high on Monday at $550 an ounce, will likely continue to climb in 2006, partly due to pressure from hedge funds looking for alternatives to stocks, bonds and currencies, according to industry experts.

Carter Braxton Worth, a market commentator in Oppenheimer & Co.'s equity research department, says hedge funds are holding onto gold, but he doesn't see much new demand for the precious metal coming from hedge funds, at least for now.

"Hedge funds who have aggressively accumulated positions in gold appear to be resting. On a day-to-day basis, there is not much in the way of new buying," Worth said. "In the context of gold having reached a 25-year high, a lot of buyers who entered the market appear to be digesting, waiting and watching. Having established large positions over the last several months, the presumption is that gold bullion and gold mining stocks are likely to trade sideways in the days/weeks ahead."