Gold climbed over the $1200 mark yesterday before noon Eastern time, but it closed slightly below that threshold. Not today – today gold stayed above the $1210 mark for much of the trading day.
An article on CNNMoney.com talks about the record prices and their relationship to the dollar. With the dollar weakened by the economy and the uncertainties in the US and around the world, gold and other commodities rise in prices.
Per, their article, gold prices increased by more than 34% this year. They expect the prices to gain even more in the first quarter of 2010 making it past $1400, but then they expect the prices to decrease to the $1000 range.
That’s certainly an interesting viewpoint, and it is a viewpoint considering there are many unknowns that could make the price continue to climb or to drop.
The CNNMoney.com article: Gold ends at record high above $1,200
In a separate article, this comment provides another explanation of the situation:
“‘We believe that a key fundamental supporting factor for gold is the continuing shift of central banks and governments from being net sellers of gold to net buyers,’ said Daniel Sacks, portfolio manager of the Investec Global Gold Fund.”
You can read this article discussing the bullion market in its entirety: Bullion climbs to new heights
An excerpt from a related article: Gold’s perfect storm
“Panic profit-taking on the broader commodity markets saw a very stark correction in gold prices, finally breaking the uptrend,” said VTB Capital analyst Andrey Kryuchenkov.
However, he added: “The case for gold remains very bullish, with increasing rhetoric over central bank diversifications and US inflation expectations still running high as we go into 2010.
“We are witnessing a dramatically changing environment with bullion becoming one of the favourite investment vehicles within the investment community,” said Kryuchenkov.
The metal draws strength from fears of higher inflation because it is regarded as a “safe-haven” investment in times of economic uncertainty.
“For hundreds of years, the yellow metal has been widely seen as a universal currency where countries across the world have sought the precious metal as a store of wealth and of preservation of power,” said analysts at Fyshe Horton Finney stockbrokers in London.
“Gold has seen a surge in its fundamental value in recent times and has just recently hit record highs … and analysts believe this could rise well into next year.”
The common thread in these articles seems to be that gold will continue its climb in the near future. However, the observers do not agree on how high or when the turnaround will occur.
In fact, the third article seems to have been written at the end of last week when a small downturn in the prices occurred. But, the early week and today saw the record highs again.