Gold is likely to rise to a new all-time as investors continue to safeguard their wealth in an environment of declining economic growth

The gold price surged higher Monday, rising $39.00 to $1,677 per ounce. Weakness in the U.S. dollar, spurred by healthier risk appetites amongst investors, propelled the price of gold. The euro rose against the greenback following a pledge this past weekend from French and German leaders to do whatever is necessary to prevent a banking crisis. S&P 500 stock futures climbed 15.40 to 1170.30, which crude oil rose 2.2% to $84.80 per barrel.

While the gold price has remained in a correction mode over the past month, many precious metals strategists see the yellow metal resuming its advance in the months ahead. The latest firm to raise its gold price forecast was Morgan Stanley, which predicted that gold will be the top-performing commodity in 2012.

The price of gold is likely to rise to a new all-time as investors continue to safeguard their wealth in an environment of declining economic growth, according to Morgan Stanley’s Hussein Allidina. The firm raised its 2012 gold price target by 35% to $2,200 per ounce, and said it could reach $2,464 in a “bull-case” scenario. As for silver, Morgan Stanley lifted its target to $50 per ounce.

“With macro headlines threatening demand across the complex, we have become more selective about commodity exposure,” Allidina contended. “Gold and silver are our top commodity picks heading into 2012.”

“Gold, and silver to a much lesser extent, are viewed as safe havens and stores of value as well as the closest thing to a global reserve currency,” he added. Gold “has been the most resilient in past recessions.”

Looking ahead to this week, there are several key economic reports likely to serve as catalysts for the gold price. The Fed minutes – a recap of the most recent FOMC meeting – will be released on Tuesday, followed by weekly jobless claims on Thursday. The week concludes with retail sales and University of Michigan Consumer Sentiment on Friday.

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