2011-08-17

Plenty of fuel for the fire to see gold go higher

The gold price advanced $16.50 to $1,783 per ounce Wednesday, spiking higher on the news that gross domestic product in the 17-nation Euro zone rose a mere 0.2%. The price of gold, which sank as lows as $1,728 per ounce early yesterday, climbed following the weak economic data out of Europe. Additional bond purchases from the European Central Bank are highly likely following Europe’s weakest GDP figure since the global economy was mired in a recession in 2009. The euro fell to 1.438 against the U.S. dollar on speculation that the ECB will cut interest rates at its next policy meeting.

There is “plenty of fuel for the fire to see gold go higher,” according to Jeffrey Wright, metals and mining analyst at Global Hunter Securities.

In a note to clients, Wright reiterated his bullish outlook on gold and his six-month target of $2,000 per ounce. The two primary catalysts for his positive stance on the yellow metal were further accommodative monetary policies from the Federal Reserve and a deteriorating economic environment in the euro zone. Wright’s comments came as COMEX gold futures climbed to a new all-time high on a closing basis of $1,785.00 per ounce on Tuesday.

Following the COMEX close, gold futures hit $1,788 in electronic trading - just 1.6% below their intra-day record reached last week.


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