2011-07-28

The gold price received support from not only the debt ceiling uncertainty, but also from TD Securities, which raised its price forecasts

The gold price spiked to anther all-time high, touching $1,626 per ounce Wednesday morning. The price of gold advanced following the news that durable goods orders unexpectedly fell 2.1% in June – versus expectations of a gain of 0.3%. Worries that a more severe drop in consumer spending is forthcoming weighed on stock and commodity markets. Crude oil fell 1.1% to $98.47 per barrel and copper sank 0.8% to $4.44 per pound. Silver followed the gold price higher, rising to $41.07 per ounce.

The gold price received support from not only the debt ceiling uncertainty on Tuesday, but also from TD Securities, which raised its price forecasts on the gold. The firm increased its gold price target to $1,512 from $1,400 per ounce in 2011 and to $1,700 from $1,400 in 2012.

In TD Securities’ report, analyst Greg Barnes wrote that “The higher gold price reflects our view that gold should benefit from the uncertainties facing the global economy and a continued trend by investors to seek way to insulate their portfolios against these ongoing risks.”

Barnes went on to say that “Economic conditions in the U.S. appear to be softening…Expectations of Fed tightening continue to be pushed back…given the economic backdrop, further easing by the Fed (QE3) would not be out of the question.”

Alongside the possibility of QE3, TD Securities cited several other “significant macro risks overhanging the global economy that should provide continued investment demand for gold, including: the potential for a double dip recession, risk of sovereign debt defaults, questions surrounding the future of the Euro, uncertainty regarding the long term status of the U.S. dollar as the world’s reserve currency, the sheer size of monetary stimulus that remains to be unwound, and developing world inflationary pressures.”

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