Gold Market May Soon Reach $1300 Posted by James Randolph on June 21, 2010
Bullish Analysts Eyeing $1,300 for Gold by Year’s End — If Not Sooner
June 21, 2010 – As the gold market took wing again Friday, June 18, analysts’ eyes began to reflect the sparkle of the precious metal. The New York spot price closed at $1,256.50 after hovering around $1,260 for most of the day. August futures closed at $1,258.30, also a record. Gold is the talk of the financial world right now, with every analyst offering a theory for its rocketing prices.
One possible reason given for gold’s surge was Spain’s successful bond sale. The western European country is in the middle of a sovereign debt crisis. Earlier this week, rumors abounded that a massive bailout was in the works from the International Monetary Fund (IMF), among other institutions. This fear itself fueled gold prices at mid-week, but by the end of the week, anxieties surrounded the worry that the IMF and the European Central Bank (ECB) might have to sell off gold reserves to raise cash. The success of the bond sale alleviated some of that fear, making the specter of a gold market sell-off much less likely.
Another theory is that many emerging economies are buying gold. Iran’s recent announcement that it would sell €45 billion for U.S. dollars and gold adds to speculation that countries like China and India are abandoning their foreign currency reserves in favor of the precious metal. China’s gold holdings are much lower in proportion to its currency holdings than most major economies.
Another encouraging factor for the gold market is that the summer months are the slow season for gold, especially in countries like China, India and Vietnam, which is the world’s highest per capita consumer of gold. The festival and wedding season in India begins in the fall, and gold sales in that country skyrocket around those celebrations. Scott Redler, chief strategic officer for T3Live.com, says, “That’s when you’re going to see the shorts throw in the towel, people add on, and that’s when we’ll get that $1,400, $1,500, $1,600 an ounce.” Hang on, investors — it’s going to be a wild ride.
Senior Staff Writer – Certified Gold Exchange