Gold Rallies To Nearly $1,200, But Will Price Be Maintained?

World News
09/02/2016 15:11

The gold price hit an eight-month high overnight (Feb. 8-9), very close to $1,200 an ounce and establishing a new battleground that will determine whether the current rally turns into a prolonged upward trend, writes The Week. After three consecutive annual falls during a bull market for equities and, latterly, the apparent return to an increasing interest rates, some analysts have ditched earlier predictions for gold prices to drop further. The Capital Economics think tank has called a price rise to $1,250, while Jeffrey Gundlach, the so-called "bond king", has forecast a surge to $1,400. With equities drift that characterised the second half of 2015 evolving into a full-on rout and amid pessimistic warnings of a global recession, investors are rushing to safe havens – and especially gold. That expectations for a US rates hikes have dimmed and the dollar has slumped has only added impetus to the move.

Analyst Daryl Guppy for CNBC, noting the four downward trends going back to 2013, says, "Now, the rally in gold has the potential to develop into a breakout… and become a new uptrend. But the strength and sustainability of the gold rally is still not clear. This price activity may help to establish a fifth downtrend line in the fan pattern. Investors wait for proof that the price can move above and stay above $1,200. This will signal a new, sustainable uptrend."