Will Gold Reach $1,200 by Year End?

Mark O’Byrne submits:

Gold
Gold rose to new record highs yesterday and again this morning above $1,093/oz in what appears to have been continuing reaction to the news that Indian central bank had bought 200 tonnes of gold from the IMF . Gold has also surged in euro and pound terms.

The new record high price and the price at these levels is not extreme given that the India central bank buying shows that there is a huge appetite for gold around these price levels as the average price paid for the 200 tonnes (bought by the Reserve Bank of India) was around $1,045/oz. Indian central bank officials have suggested that they wish to buy another 200 tonnes from the IMF. Thus, gold prices over $1,000/oz are sustainable in the long term and there would appear to be a long term floor under the gold market around the mid $1,000s/oz. Our start of year forecast of gold prices over $1,200/oz in 2009 looks quite possible, especially with two of gold’s seasonally stronger months upon us (November and December).

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