Price of Gold Increases 1.5% Since Friday, Chinese Analysts Predict Gold Price to Rise to $2,000/oz by March 2012

The price of gold shot up 1.5% since closing on Friday with trading reaching as high as $1,718 and as low as $1,704.  The increase in gold prices have come from a variety as sources, including Chinese gold reforms (by the Chinese Ministry of Information and Technology) and improved equities markets in the US which have reduced the liquidation of gold assets for cash.

A number of sources and analysts in the gold commodities sector expect prices to continue to increase.  The news may come as a shock to many who panicked after seeing gold prices tumble to just $1,625 back in October 2011.

Phil Streible, a senior spokesperson for R.J. O’Brien said that if gold holds steady at the $1,725 level then it could become the set resistance level and remove any fear of gold falling.  J.P. Morgan Metals stragies Michael Jansen agreed with this, telling clients on Monday that gold’s new level resistance is in the $1,730 - $1,770 area.

A significant part of this increase in gold price is the squeeze on the US dollar and poor data for home sales.

Finally, the Chinese Ministry’s plans to reform the mainland gold sector in China could have the long term effect of pushing gold prices up to $2,000 by Spring 20102.

The reform in China will eliminate smaller scale gold mines and smelters, with the effect of supporting International gold prices.  The World Gold Council has already predicted China’s gold consumption to increased to more than 800 metric tonnes in 2012 (50 tonnes higher than in 2011).

Other metals trades and commodities brokers expect gold bullion to reach $2,000 as early as January/February 2012, stating that investment demand and the US economy could force prices higher, regardless of a decrease in demand from Indian jewellery markets.