Gold Price Targets $1,500

GOLD PRICE NEWS – The gold price is approaching the $1,500 per ounce level, trading as high as $1,488 Friday afternoon before closing at $1,486.50 per ounce.  Gold prices surged today as inflation expectations rose on news of hotter than expected consumer prices in China.  Despite numerous headlines for the yellow metal, gold prices advanced less than 1% on the week and have appreciated a mere 4.5% thus far in 2011.

Gold’s sister precious metal, silver, has been another story.  Silver hit fresh 31-year highs today at $42.95 per ounce, closing the week up 4.9%.  The silver price has rocketed up 39% this year.  Weakness in the U.S. dollar has helped drive investment demand for precious metals.  The U.S. Dollar Index (DXY), a basket of the world’s leading currencies, sank to fresh 52-week lows yesterday.

Demand for commodities – for hard, tangible assets – has been on the rise, helping to drive not only the gold price, but also corn, wheat, and oil.  Oil climbed to 31-month highs earlier this week.

Gold prices have risen for three consecutive weeks while silver has risen a remarkable 11 weeks out of the past twelve.  Scotia Mocatta Precious Metals Research team commented on the action in silver, noting that, “The trend remains very bullish with no pattern to suggest this directional move is nearing its end. The Gold Silver ratio has moved lower again to fresh multi decade low of 34.82. We had the 34 to 35 area as an estimated target but price has yet to show any sign of reversing.”

Despite strong gains in the gold price, gold mining stocks traded poorly.  The Market Vectors Gold Miners ETF (GDX), closed lower by $0.20 at $61.44 per share.  The GDX finished the week lower by 3.9% and is now down $0.03 in 2011 – lagging the 4.5% rise in the gold price.  Notable gold stocks on the move Friday included Barrick Gold (ABX) and IAMGOLD (IAG), which closed down 0.2% and 8.4%, respectively.

Scotia Capital, which raised it forecasts for the gold price in 2011 and beyond earlier today, reiterated their bullish outlook although did sound a note of caution over the short-term.  “We remain extremely bullish on the precious metals sector for the next couple of years and believe the reasons for the recent moves higher do not seem to be abating; however, caution should be exercised as we move into the spring, a season of typical weakness for gold and silver.

Others are more bullish on the prospects for the gold price, notably analysts at Standard Chartered.  Their analysts recently commented that “Our base-case forecast is that prices rally to peak at an average of $2,107/oz in 2014, although our modeling suggests a possible ‘super-bull’ scenario of gold prices rallying up to $4,869/oz by 2020, should current relationships between Asian demand and gold persist.”

As far as the threat from tighter money in coming months, the research team at Standard Chartered noted that “We expect some headwinds for gold to come from higher US rates, but we find that the impact of higher rates is rather muted and we do not expect this to derail gold’s rally for now.”

(Source: http://www.goldalert.com/gold-price-targets-1500/)