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Gold at $1,800-$2,000 by Year-End: Analyst

Release Date: 
Thursday, July 28, 2011

Gold is consolidating on the New York Spot Market today after reaching an intraday high of $1,631.20 an ounce on Wednesday. Gold has risen 7.6 percent in July prompting some investors to lock in profits after record highs. "Gold’s moved $150 this month, so there are going to be some investors who are going to take profits," Frank Lesh, a trader at FuturePath Trading LLC in Chicago, said by telephone.

As Congress continues to work through competing proposal to raise the debt ceiling, James Moore, research analyst at FastMarkets, tells The Street, he thinks many investors are sitting on the sidelines until a final resolution is reached. However, Moore cautioned that no Congressional plan contains sufficient reductions in spending to avoid a potential downgrade of the U.S. credit rating;,"ratings agency Standard & Poor's requiring a $4 trillion reduction commitment over 10-years."

Should Congress fail to pass a comprehensive plan and raise the debt ceiling by August 2, Tim Harvey, senior vice president of ETF Securities, says a default may prompt a temporary sell-off, followed by a climb to new record highs. Harvey cites long-term debt concerns as the main catalyst that will drive the market higher. "All we are trying to do now is fix how we are going to be able to spend a bit more cash not how we are going to fix paying this huge amount of debt we have."

Precious metals’ analyst and Gold Stock Trades Editor Jeb Handwerger shared his forecast for gold in an interview with publication, The Street Thursday morning. Handwerger affirmed previous price targets for $1,800-$2,000 by year-end, even if Washington resolves the battle over the debt limit by August 2. According to Handwerger, "Debt issues are going to continue in Europe and the United States and we see this as a long-term issue. We think gold can hit $1,800, $2,000 by year-end," he said.

(Sources: "Gold Falls for Second Day as Some Investors Sell After Rally to Record" Bloomberg, June 28, 2011; "Gold at $1,800 Regardless of Debt Ceiling Outcome in Washington: Strategist" The Street, June 28, 2011; "Gold Prices Pull Back as Investors Await Default" The Street, June 28, 2011)

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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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