Strong buying demand out of China pushes gold higher for a second day, rising 0.5% to $1,639.60 an ounce. Despite a rise in the dollar index, gold bullishness prevailed on record imports from Hong Kong ahead of the Chinese New Year later this month.
Gold prices are up 2% so far this week, now sitting at a 4-week high. The precious metal also closed above the 200-day moving average of $1,632.69 an ounce; signaling what could be a significant shift in sentiment.
Several major Wall Street firms are expecting prices near or above $2,000/oz in 2012. Here are a few of those gold targets:
Goldman Sachs: $1,940/oz.
Morgan Stanley: $2,200/oz.
Citi: $2,400/oz.
"We predict that $2,400 is a reasonable target for this year," says Donald Doyle, Chairman & CEO at Blanchard & Co. —the largest retail metals dealer in the U.S. "The principle factors that are pushing gold higher now have really been in place for some time."
Doyle points to global economic uncertainty, a concerted effort for currency devaluation around the world, strong supply & demand fundamentals, and growing global central bank holdings.
"We think that it's inevitable that we're going to see significantly higher prices," says Doyle.
While super bullish on bullion, he warns against buying a basket of gold producers, like the popular Market Vectors Gold Miners etf (GDX).
"You're also buying serious political risk in the case of many of the producers, and you're buying a whole host of economic uncertainties that exist with any big corporation," he explains. "We think there is a place in your portfolio for shares in gold mining companies, but it's more important and more beneficial to your returns over an extended period to have the pure return on the price of gold."
After a rough close to 2011, are you more bullish on gold? Let us know in the comment section below or visit us on Facebook.
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