American Bullion -- Gold To Reach $1300

Monday, July 05, 2010 at 06:37am

July 5, 2010, Los Angeles – The price of Gold closed higher on Friday as bargain hunting continued following the sharp pullback in Gold bullion prices during the week. Gold still managed to rise a whopping 12 per cent in the second quarter of 2010, the sharpest increase since the third quarter of 2007.

Investors continue to accumulate Gold coins and Gold bars as a hedge against global financial uncertainties. "People like gold when it's all a bit chaotic out there," says Sean Butler, investment director for Liontamer group.

"Gold is widely used as a safe haven for investors, especially during volatile economic conditions and times where there is uncertainty about major currencies like we are currently experiencing with the Euro."

After reaching its strongest level in 6 weeks against the dollar, the euro declined on reports that the region’s central bank will keep interest rates at their current record low level. According to a Bloomberg survey released last week, all 55 economists surveyed said the European Central Bank will leave rates unchanged at 1 per cent when policy makers meet on Thursday.

“The euro-zone economy isn’t strong enough to warrant an interest-rate hike,” said Lutz Karpowitz, a senior currency strategist at Commerzbank AG in Frankfurt. “Near-term gains for the euro against the dollar are unlikely.” Also weighing on the euro are investors fears that government's efforts to trim national budget deficits will stymie economic growth.

A mixed Jobs report for June showed U.S. payrolls dropped for the first time this year as the unemployment rate fell to 9.5 percent from 9.7 percent (analysts were looking for an increase to 9.8 per cent.

U.S. stocks plunged last week, with the Dow recording its first seven day loss since 2008 and the S&P 500 dropping 5 per cent to its lowest level since September 2009. Investors are expecting Gold prices to advance following its recent pullback as concerns over an unstable global economy help to increase demand for the metal as a store of value.

Renewed investor concerns of an economic slowdown have fueled speculation that the Fed will continue its easy monetary policy. Gold bullion prices are expected to continue to be supported as long as the current near zero interest rate policy is in place.

The price of Gold will reach $1,300 this year according to Anne-Laure Tremblay, analyst at BNP Paribas SA. Investors have taken note of her latest forecast since her Gold price forecast for the second quarter was accurate to within 0.1 per cent. Protect your wealth from eroding currencies by accumulating physical Gold. Invest in Gold and Silver today.