Analysts Expect Gold Prices to Increase in 2012

Analysts are of the opinion that gold prices are set to increase in the coming year. In 2011, gold fluctuated a lot. It started at $1,412 per ounce, dropped to $1,314 and shot up to a high (intra-day) of $1,923 per ounce. The recent months have been particularly volatile for the gold market.

September saw the price of the precious metal fall by 13%. It reduced by 8% in the past week, when the dollar gained strength and pushed the prices down. With liquidity reducing as a result of Europe’s economic situation, pushing investors to move into the dollar, gold lost its status as a safe haven. This situation has not, however, raised alarm for analysts. The reason is that they believe that the next year will be promising for the precious metal.

$2,000 Target may be Reached

An analyst at Global Hunter Securities stated that in 2012, the price of gold will most likely be $1,800 per ounce. He went on to say that gold prices could go as far up as $2,000, or a close $1,900.

This is possible especially if the problems in the Congress result in a budget war. In case this happens, the fiscal issues that the country is going through will be brought to the fore. This can eventually put a lot of pressure on the dollar (US). Gold will then regain its position as a safe haven.

Gold has been on a Climb at the Rate of 17% (Average) Annually

S&P Capital IQ’s analyst believes that gold may not reach $1,900; nevertheless, the precious metal’s price will climb up. Over the past ten years, the price of gold has been on the rise consistently - 17% on an average annually. It is possible that there will be a correction.

M2 supply in the US has gone up by 9% since the beginning of 2011, and the monetary base by 30%. These factors have made it possible for gold to reach high prices. For a while now, $2,000 for the precious metal has been the target expected to reach in 2012. The recent drop in prices upset this. However, according to current analysis of the situation, a rise of 12% is a possibility.