GOLD RISING - DOLLAR UP
Gold is up $10 in early trading and silver is up $.09 as the bull market continues. Gold again challenged overhead resistance reaching as high as $861.60 before easing back slightly on profit-taking. Strength in gold is demonstrated by the fact that it rising even though the dollar is up 11 basis points at 85.92 and oil is down $1.41 at $42.02. The equities are also lower with the Dow Industrials down 157 points. All in all, the performance of the metals including platinum and palladium is solid and these metals present a buying opportunity, especially gold and silver.
Mark Hansen, an analyst with the CPM Group told CNBC this morning that gold is in a clear, well-defined bull market. He said he expects gold to trade over $1,000 an ounce this year. He also said the basic supply demand fundamentals are solid for gold. Investment demand is soaring with large investors trying to accumulate substantial positions. At the same time, production is declining, central bank sales are falling, and some central banks are adding gold to their holdings. All in all, a bullish outlook for the gold market on base supply/demand fundamentals.
Analysts told the Dow Jones Wire Service that gold is supported by the continued instability in the financial sector and what seems to be the ineffectiveness of the bailout attempts. This is reinforcing gold as the ultimate store of wealth. They further commented that recent buying has been seen from two banks in particular. We have to wonder who those two banks are and whether they are buying gold for a client or for their own account. I suspect they are buying for central banks or very large clients. The chief strategist at CMC World Markets told Dow Jones Wire Service, "Gold could target the December high of $890 in the near-term as investors may chase the prevailing trend given new year portfolio allocation."
Clearly, the trading patterns of gold indicate momentum to the upside and gold has been setting a pattern of higher highs and higher lows, as it works its way through this corrective cycle. It would appear the consolidation is healthy and likely to assist gold in building the base necessary to again push back into the $900 to $1,000 trading range. Time will tell. Given the forecasts from analysts at major banks such as Merrill Lynch, Citibank, UBS, Peter Hambro, Morgan Stanley and others, it would appear a substantial move to the upside lies ahead this year. Gold looks like an excellent buying opportunity at these levels.
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†This material has been prepared for private use. Although the information in this commentary has been obtained from sources believed to be reliable, Goldline does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice.
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- S&P Capital IQ - Gold: $1,900 (in 2012) "Leo Larkin, metals and mining analyst at S&P Capital IQ, thinks that $1,900 gold might not be that much of a stretch [in 2012]. 'Gold has been ..."
- Citigroup - Gold: $2,300 - $2,400 (by end of 2012) "While we remain cautious on Gold in the near term...we continue to believe that the bull market remains intact...we believe that 2012 may be..."
- Leeb Capital Management - Gold: $2,500 - $3,000 (in 2012) "I'll give you my target for gold at the end of 2012, it's going to be trading somewhere between $2,500 and $3,000. This..."
- Global Hunter Securities - Gold: $1,800 (in 2012) "'What I am looking for is a gold price of $1,800 an ounce in 2012,' says Jeffrey Wright, senior research analyst at Global Hunter..."
- US Global Investors - Gold: $3,600 (by 2017) "'People get so caught up with the next three minutes for gold and they should really be focused on the next three years,' says Frank Holmes, ..."
- Goldman Sachs - Gold: over $1,900 (in 2012) "Wall Street investment bank Goldman Sachs predicts that gold's bull run will continue into 2012 with a low interest rate environment and..."
- CNBC - Gold: $2,400 (no period given) "Gold will top $2,400 an ounce. The long-term bull market in gold marches on. Gold won't make a straight shot to a new inflation-adjusted high. As long..."
- Nomura - Gold: $2,000 (by end of 2012) "Nomura has raised its forecast for gold prices to $2,000 an ounce by the end of 2012, from $1,800 earlier. The brokerage said the low-interest rate..."
- Morgan Stanley - Gold: $2,200 (in first half of 2012) "Gold will lead a rally in commodities in 2012 as Europe's sovereign-debt crisis continues to roil financial markets, spurring demand for ..."
- UBS - Gold: $2,050 average in 2012 "[Gold] remains one of the top commodity picks for 2012 as 'most of the factors that pushed gold higher in 2011 are not going away,' according to UBS..."
- Bank of America Merrill Lynch - Gold: $2,150 - $2,200 (average in 2012) "From a technical perspective we believe that the bull trend for gold remains intact… with gold having not yet met any of..."
- TheStreet.com - Gold: $2,500 (by May 2013) "I want to own gold here. I think gold is going to $2,500 eighteen months from now... Gold has been up for ten straight years and this going to be the..."
