, IncFebruary 26, 2010 – In spite of an uneven start to 2010, analysts still see the possibility that gold prices could climb to $1,300 this year, again breaking the all-time high. This optimism is based on increasing demand, the recently announced Federal Reserve policy and a perceived pattern of steady accumulation in the secondary market.
Bradley George and Daniel Sacks of the Investec Global Gold Fund are among those who see the $1,300 price level as being possible. "We believe the result of January's US Federal Reserve Open Market Committee meeting is more bullish than bearish for bullion going forward, say George and Sacks. "Although the outlook for inflation is stable according to the Federal Reserve's statement, we believe the reaffirmation by the Federal Reserve that rates are likely to remain low for an extended period, which should be supportive of gold prices in the long term."
Plans by central banks to slowly add gold reserves may benefit the market as well. George and Sacks said publicity involved with large governmental purchases drive down prices and "instead they may be pursuing a strategy of steady accumulation over time in the secondary market," the managers said. Such moves help to steady demand in the market. Finally, there is increased demand in both the investment and jewelry sectors. This rising consumer demand adds pressure on available supplies, potentially driving prices higher.
With these and other factors, Sacks and George see a compelling case that gold prices could climb $1,300 per ounce this year, well exceeding today’s midday spot price of $1,115.10 per ounce. Investors who see the recent correction as the new floor for prices should consider making purchases before any potential price increases occur and lower any possible profits.
Ronald Stevens
Senior Staff Writer - GoldPrice.net
