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Gold Bugs Waiting for the Next Big Surge
by Michael Locklear
September 12, 2012 – The Federal Reserve’s commitment, as expressed by Chairman Bernake, to prevent another recession by every means possible, have gold market analysts predicting that the spot price of gold will reach a record high in the immediate future. Predictions that the price of gold would reach heights above $1800 per ounce have been around for several months now. Blanchard predicted that it would the height of $1850 per ounce by year’s end in July. Now those predictions have been joined by UBS and Bank of America, with some saying that gold will reach the height of $2000 per ounce or more by year’s end.
By early this afternoon, Kitco.com shows the price of gold at $1,731 . All day prices have been fluctuating and in the end gold prices have lost a little ground. Still driven by the expectation of the U. S. Federal Reserve’s announcement concerning further monetary easing, price rises this week have experienced a minor setback today. Nonetheless hope springs eternal.
After the announcement by Germany’s Federal Constitutional Court of its ruling in support of further financial supports, the price of gold was on the rise. Today alone the price for gold was up to $1,749.50 before, it turned and headed downward slightly toward its current levels.
Since gold prices are pushed higher by nervous investors seeking shelter from the instability they anticipate from additional monetary easing by both the European Central Bank and the U. S. Federal Reserve , then the momentary fluctuations in gold prices merely reflect the mood of the moment and not the long-range view.
The environment that will continue to push the price of gold higher remain multifaceted and complex. Stagnation in the economy, debt crises in the euro zone and the United States, war drums beating in the Middle East, persistent high unemployment numbers, and currency devaluation are all fuels for speculation by nervous investors seeking gold as a safety zone.
Another factor is that we’re entering the period the year where personal purchases of gold reach an annual high in India and China. As we move into their festival and holiday season which will run into 2013, in the case of the Chinese new year, looks to be the momentum for considerable price rises in gold.
Despite assurances from the European Central Bank President Mario Draghi that the ECB’s new approach to debt management will not result in inflation, gold bulls , remains skeptical and expect the opposite to occur. This coupled with the anticipation that the Federal Reserve will move to another round of quantitative easing which will inevitably result in currency devaluation and inflation in the United States has gold investors still in a fever pitch to move more money into gold.
The rest of this week has two significant pieces of information coming forth. Investors are anxiously awaiting to see what the Fed’s next move will be and the market’s response to the German courts ruling. Gold could make a major job like the one we saw on September 7 that produced a $50 price hike, of course only time will tell.
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