Gold rises, extends previous week's 5% rally
New York (July 15) Gold futures rose on Monday, attacking the $1,300 threshold, after hitting an intraday high of $1,294.69 earlier. Gold prices keep extending the gains from the previous week's rally, the biggest since October 2011.
Gold futures were trading 0.49% higher on Monday to $1,283.90 an ounce at 11.55 pm EDT, while silver futures gained 0.26% standing at $19.845 an ounce at the time of writing.
After hitting the $1,290 level earlier in the day, gold found support at around $1,280. Last week, gold spot prices rose by 5.1%, attracting speculation on the bullion. However in the three months to June gold prices fell more than 25% , while silver has booked the worst quarterly loss since 1980.
Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, were seen at 939.07 tonnes on Friday, keeping the outflow at the lowest in four years. Holdings shrunk 21% in the last quarter, the biggest slide on record.
The US dollar index, which normally correlates inversely with precious metal prices, rose by 0.26% on Monday to 83.200, after an initial weakening earlier in the day on speculation that US data on retail sales published later in the day may contribute to the Fed decision to curb its monetary stimulus.
The markets are still hearing the echoes of Federal Reserve (Fed) Chairman Ben Bernanke's speech from the last week suggesting the central bank would not taper its multi-billion bond-buying program as soon as investors had anticipated. However, not everyone was entirely convinced, especially when various senior Fed officials have been sending contradictory signals to the market, outlining ever-deepening divisions among the central bank's policymakers.
Gold prices prediction
Gold spot prices are likely to remain in the area between $1,200 and $1,300 an ounce on the horizon of at least the next two years, according to Mike Edwards, CEO of Australia-based gold explorer Monteray Mining Group. “For a year or two I see gold around US$1300,” Edwards predicted on Monday.
Prices of gold have risen more than four-fold between the beginning of 2005 and September 2011, however, since then the price has fallen more than 32%, as a stronger greenback has developed greater pressure on prices and concerns surrounding the Fed's monetary stimulus tapering hit the markets.
