Not Far From Historic Gold Price High

The gold price has surged since Tuesday's Federal Reserve meeting ended with announcements

of no change on interest rates and the potential that the Fed could by Treasury bonds as part of a new effort to boost the economy. Analysts were quick to call for higher gold prices after the Central Bank leaders announced the decision that also served as a negative-dollar catalyst.

In mid-day London the gold price was a mere 30 cents from $1,300, New York Comex trade and currently (September 24) offers a spot rate of $1,297.80 as New York NYMEX trade has started. The gold price closed New York trade Wednesday up $1.30 to a closing price of $1,292.50.

Continuing its decade-long upward trend, the gold price is now higher by about 18 per cent for 2010, which is likely to become the tenth straight year of increases in the price of gold.

Despite a Thursday report that showed US home sales have been better than expected, another report on unemployment claims for last week disappointed. This suggests that the economy still faces an uncertain recovery, which drives the already strong interest in gold buying.

Gold is not the only precious commodity reaching new heights. Silver prices reached their highest level since October 1980. One ounce of silver for immediate London delivery traded as high as $21.3875 Friday morning. Many analysts suggest that silver has much room for upward mobility since it has not nearly kept base with gold during its upward trend.

While it failed to achieve $1,300 in an earlier attempt, chances are still good that the gold price may eclipse that mark for the first time before Friday's New York trade ends. This would be an important psychological milestone for gold investors as this level has been in sight, and targeted, for several months by analysts.

As long as uncertain data is presented on the future of the economy, gold prices appear to have limited interest in a ceiling on prices. Some forecasts for 2011 have called for gold to reach as high as $1,800.

James Turk, top gold expert and founder of goldmoney.com, has long called for the gold price to rise to $3,000-$5,000 by 2010. He believes gold still lags well behind where it should be at this point, considering decades of inflation yet to be fully priced in.

by: James Rowell

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