GOLD PRICE NEWS - The gold price rose $3.24 to $1,239.94 as the price of gold continued to outperform stocks and cyclical commodities. The gain in the gold price came despite the euro currency trading higher by just 0.1% at 1.2334 against the U.S. dollar as equity markets in the U.S. closed. The SPDR Gold Trust (GLD), which acts as a proxy for the gold price, closed higher by 0.3% at $121.30 per share. At $1,240 the price of gold is now higher by $25.80, or 2.1%, in the month of June, and $144.61, or 13.2%, year-to-date.
The spot gold price opened the day modestly weaker, but quickly turned higher - rising as much as $11 to $1,247.50, before giving up a portion of those gains but remaining in positive territory. The broader also opened slightly to the downside, but extended its decline throughout the day. The Dow Jones Industrial Average (DJIA) finished Thursday down 145.64 points, or 1.4%, at 10,152.80. The Dow Jones is now up by just 0.2% this month, and has fallen 2.7% in 2010.
While the gold price has continued its bull market this year, several Wall Street firms and market strategists have recently raised their forecasts for the yellow metal. The latest firm to do so was Credit Suisse, which increased its target gold price for each of the next five years. David Davis, research analyst at the firm, lifted its forecast to $1,145 from $1,025 in 2010, to $1,105 from $1,000 in 2011, to $1,105 from $1,010 in 2012, to $1,220 from $1,090 in 2013, and to $1,300 from $1,120 in 2014.
In a note to clients Davis wrote that “We believe that this influence will dissolve in the short term but is likely to reappear in waves, and as such we can expect some volatility in the gold price. Our global equity strategy team believes there is an 80% chance of a renewal of quantitative easing either owing to the sovereign credit crisis or a double dip occurring in which case the current macro environment will likely reappear.”
Although Credit Suisse has issued a more positive outlook on the gold price, it pales in comparison to other forecasts. David Rosenberg, chief economist and strategist at Gluskin Sheff, recently predicted the price of gold will hit $3,000 within the next few years. Peter Schiff, President of Euro Pacific Capital, has forecasted a gold price of $5,000 to $10,000 in the next five to ten years. On the opposite side of the spectrum is Robert Prechter, President of Elliot Wave International, who has remained bearish on gold for many years and forecasted this past January that the gold price would soon plummet 40%.
