2011-08-05

Gold price will reach $1,900 per ounce by October of this year

The gold price continued its record-setting run Thursday, climbing to $1,678.50 per ounce before back to 1658 this Friday (Eastern Time). The price of gold soared despite broad-based strength in the U.S. dollar, which gained 4% versus the yen after intervention in the currency markets by the Bank of Japan. Concerns over the prospect of a double-dip recession in the U.S. have boosted the allure of gold and weighed heavily on global stock markets in recent weeks.

The gold price advanced to a new record high yesterday for the fifth day in eight trading sessions. The spot price 0f gold reached an intra-day high of $1,672.80 per ounce, boosted by ongoing economic worries in the United States and Europe. COMEX gold futures, per the December contract, hit a new all-time high of $1,675.90 per ounce.

With the gold price posting a series of new all-time highs this week, sentiment toward the yellow metal has risen in kind. Market Vane’s Bullish Consensus figure reached 87% on Wednesday, just below territory historically associated with short-term peaks in the price of gold. From a contrarian perspective, this level of bullish sentiment is a warning signal that the gold price may be due for a correction.

Notwithstanding the shorter-term outlook for the gold price, several noteworthy investors believe the gold price will continue to move higher in the months and years ahead. John Taylor, founder of the world’s largest currency hedge fund in FX Concepts, recently predicted the gold price will reach $1,900 per ounce by October of this year.

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