Forecasted that the price of gold will average $1,875 per ounce in the fourth quarter of 2011

The gold price retreated on Tuesday, falling nearly 1.1% to $1,661 per ounce. Risk aversion rose across the globe, leading to lower stock and commodity prices. Oil and copper prices fell 1.2% and 3.5% to $84.35 per barrel and 3.24 per pound, respectively. Investor concerns spiked over Europe’s debt crisis this morning as Slovakia, the only country to fail to ratify the new version of the bailout fund, was set to vote. Silver, off 1.5% to $31.49 per ounce, fell alongside the price of gold.

The euro’s rise was fueled by reports that German Chancellor Angela Merkel and French President Nicolas Sarkozy would finalize a “comprehensive response” by the end of the month that involved boosting capital levels of European banks. While equities and cyclical commodities advanced on the news, speculation that the European Central Bank (ECB) may also be forced to print additional sums of money to lend to banks helped support the gold price.

Commenting on the gold price, Barclays Capital said in a report on Monday that “Heightened uncertainty over the state of the global economy, and Europe in particular, provide a gold-fertile backdrop and we retain our positive view on gold.” The firm forecasted that the price of gold will average $1,875 per ounce in the fourth quarter of 2011, and $2,000 per ounce in 2012.

Barclays’ bullish stance echoed recent commentary from long-time commodities investor Dennis Gartman. The publisher of The Gartman Letter wrote last week that “Fundamentally it will be the disdain for fiat currencies generally that will push gold prices higher, and as the market understands that the only way out of the situation that Europe has gotten itself into is via inflation that will inure to gold’s benefit.”

In the shorter-term, Gartman contended that for the gold price to resume its “concerted, unfettered bull market,” it would need to make a convincing move back through the $1,650-$1,655 level.

Comments

Post a Comment

Popular posts from this blog

Gold edges up on weaker dollar, dovish U.S. Fed policy bets

Image
 Gold edged higher on Monday, helped by a weaker dollar and expectations that the U.S. Federal Reserve will reiterate its dovish monetary policy stance this week. Spot gold was up by 0.1% at $1,943.58 per ounce. U.S. gold futures rose 0.1% to $1,950.10 per ounce. “Gold is firm on the basis that the Fed could adopt a further dovish message with respect to average inflation targeting,” said Michael Hewson, chief market analyst at CMC Markets UK. “If you want to have a policy of average inflation targeting, you’re going to have to go into detail as to how you are going to arrive at that particular outcome.” The dollar retreated on Mond ay, bolstering gold’s appeal for investors holding other currencies, ahead of the Fed’s policy decision due on Wednesday. “If inflation forecasts remain at 2% or below, this could offer gold a tailwind as the zero-yielding metal thrives in a low-interest rate environment,” said FXTM analyst Lukman Otunuga. Market participants are also waiting
Read more

For the gold price, two outcomes are possible.

Image
For the gold price, two outcomes are possible. First is a return to or near the April low ($1,277.40). Second is a drop to a lower low, $1,240 - $1,260. Yet a third possible outcome is that the June and December lows were not a double bottom and one further drop may come. I account that the least likely, and look for a low here by the end of the week, but I'm no more'n a nacheral born durnd fool from Tennessee, so what do I know?   You'd think that an institution charged with promoting the gold industry would produce reports that at least cast the best light on gold's prospects. You'd think wrong, if you're thinking about the World Gold Council. They've been negative on gold for, oh, the last 14 years or so. Today they issued a report that contained a nugget about Chinese business using physical gold as collateral for bank credit ($40 bn worth) but they managed to tease a gloomy forecast even out of this inventive monetary use. That and bad
Read more

The price of gold advanced as high as $1,603.40 per ounc

Image
The gold price broke out to a new all-time high above $1,600 per ounce Monday morning, rising for the eleventh consecutive trading session. The price of gold advanced as high as $1,603.40 per ounce before backing off to trade just the $1,600 level. The yellow metal gained on the back of a surge in borrowing costs for Italy, the latest European nation to see its bond market come under heavy selling pressure. The lack of a deal to raise the $14.3 trillion debt ceiling also helped boost gold prices. The eleven-day rise in the gold price is the longest winning streak since January of 1980. The gold price delivered another noteworthy performance last week, climbing 3.2% on its way to a series of fresh record highs. With Monday’s advance, the gold price extended its monthly and year-to-date gains to 6.6% and 12.5%, respectively. Last week’s two-day Congressional testimony by Chairman Ben Bernanke on the economy and monetary policy revealed that the Fed remains open to the
Read more