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Will Gold Hit $1500 an Ounce?

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Gold speculators and traders have wondered for a while now whether gold will reach $1500 an ounce in the near future. The gold market like other investments doesn’t move in straight lines but rather in waves of up and down activity. This presents a unique opportunity for gold investors to profit on the short term as well as get in at a good price to make some immediate gains. All of this gold trading activity is especially prevalent when there is a lot of volatility in the currency and commodity markets like we are seeing recently.

Here are several of the top reasons we should see gold hit $1500 and ounce and above in the near future.

#1 The declining U.S dollar: As the dollar declines the price of gold has traditionally gone up. Frank Holmes the CEO and chief investment officer of U.S. Global Investors says, “Gold is attractive as a safe haven when the dollar is declining.” As the U.S deficit continues to grow it puts additional strain on the Dollar as the worlds reserve currency. All of this pressure on the dollar creates a need to seek additional investment opportunity in alternative as investors seek out other currencies and markets to put their money in.

#2 Inflation: The price of goods services and the continual rise of these prices, coupled with the increasing price of oil and other commodities has a tendency to drive people toward investing in gold. Putting money in gold has is typically seen as a safe place to invest money when there is an inflationary environment. Russ Winter of the financial blog Minyanville believes, “if the Fed keeps buying $100 billion of Treasuries until July 1, you can calculate that each $100 billion will push the commodity index up another 5% and the price of oil $7.00 a barrel.

#3 Increase in Oil Prices: when oil producing nations begin reaping record profits they often invest their excess capital in gold. With the general consensus believing that oil prices will continue to go up the outlook for continually increasing gold prices looks optimistic. Frank Holmes has believes that oil and gold have an approximate 75% correlation to each other. “This means that 3/4 times, when prices for one go up, prices for the other increase as well,” Holmes writes.

The general consensus is that  the price of gold and oil are very likely to continue going up through the final months of “quantitative easing” QE2. Gold prices should continue to follow closely with other commodity prices. As geopolitical events continue to unfold in the Middle East precious metals should benefit.

 

Gold Prices Hit Record High

gold coinGold prices reached a record high today ($60 an ounce increase) after Ben Bernake, chairman of the Federal Reserve chairman announced that they would plan to purchase an additional $600 billion in bonds to prevent deflation of the U.S dollar. This news was unexpected since many investors thought the FED would purchase only 300 billion in bonds. Gold reached a price of $1384 on trading today and silver prices surged to $26.04 an ounce on the news. Gold for December delivery closed up $45.50, or 3.4%, to $1,383.10 an ounce.

The Federal Reserve’s additional $600 billion monetary stimulus goal is to stimulate the economy by expanding the money supply. However, detractors of the plan express doubts that  this will drive down the value of the dollar without creating growth.

Many countries expressed doubt over the FED news… Rainer Bruederle, Germany’s Economy Minister said today that he was concerned at U.S. efforts to stimulate growth by injecting liquidity into its struggling economy.

In a Chinese commentary piece in the Financial News Xia Bin said, “as long as the world exercises no restraint in issuing global currencies such as the dollar — and this is not easy — then the occurrence of another crisis is inevitable, as quite a few wise Westerners lament,” he said.

Gold Declines 1 Percent On Fed Stimulus News

Gold prices dropped one percent on news from the Federal Reserve that they would purchase less government debt than originally expected to stimulate growth. The price of gold has declined sharply in relation to a stronger dollar falling back from it’s high of $1380 an ounce earlier this month. The price of gold today hovered around $1322.00 an ounce.

On Wednesday analysts at MF Global said in a note to clients that, “Wall Street may have overplayed its expectations of quantitative easing.”

The Wall Street Journal mentioned that the Fed’s purchase of treasury bonds will most likely be in the few hundred of billions rather than up to a trillion as some analysts has anticipated. The news sent the dollar higher and strengthened the currency throughout its trading session.

U.S. FED authorities plan on meeting next week to discuss policy decisions which will impact the direction of the FED policies for the near future.

Gold Prices Fall On News From Treasury Secretary

Gold prices fell almost 3% on Tuesday as news from the Treasury Secretary. Timothy Geithner made a promise Monday night that the governement will not devalue its currency and will preserve confidence in the U.S currency. On this news gold futures for December plummeted 2.6% or approx $35 an ounce on the the New York Mercantile Exchange Comex division. This is the biggest gold drop in months. In addition other metal retreated with silver tracking 81 cents lower, a 3.3% drop. Silver has outperformed gold in recent weeks. The dollar continued to level off from its eighth month low.

Price of Gold Declines

gold coinsThe price of gold declined today on news that the precious metal has been over traded as an alternative to a weakened U.S dollar. Gold had reached a high of $1387 on Thursday during exciting morning trading.

Investors are eagerly waiting for Ben Bernanke the Federal Reserve Chairman to deliver his address on future monetary policy goals today in Boston. If the dollar goes lower on troubling news the price of gold could be supported. Afshin Nabavi the vice president at MKS Finance SA recently said, “The dollar for the time being may go lower” and that will support gold.”

Gold has gained 26 percent this year and is going into the tenth annual year of gains. This is the longest time of increase for gold since the 1920’s. As world economies continue to spend trillions of dollars to dig their way out of weakened economies and stimulate growth metals continue to rally. Speculation that the FED will further increase spending is causing the outlook of the dollar to diminish.

A recent survey by Bloomberg found that 15 out f 19 traders, analysts, and investors, or 79 percent believe gold will continue to gain next week. Three predicted lower gold prices and one was believed gold prices would remain the same.

Update# Federal Reserve Chairman Ben Bernanke said today that there was a case for further monetary easing given low inflation and high unemployment, but he offered no details on the central bank’s next step. At the Boston conference today Bernanke remarked, “There would appear — all else being equal — to be a case for further action.” The Fed will it’s next policy setting meeting in November.