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.

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