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- Dubai 04:25 05:43 12:19 15:46 18:50 20:09
Many believe that the yellow metal will breach the $1,400 mark this year. (FILE)
Spot gold prices hit $1,386.54 a troy ounce on Thursday, another all-time high for a second day as the dollar extended losses, increasing investor demand for the precious metal as an alternative to currencies. Silver extended a rally to a 30-year high.
Although spot gold prices had eased slightly to $1,382/oz at the time of writing this article, the precious metal has gained 28 per cent this year, on course for a 10th consecutive annual gain, its longest streak since at least 1920.
Investors, analysts and speculators now believe that $1,400/oz will be breached in 2010 and that gold is on its way to target $1,500/oz.
"Gold appreciated by 24 per cent in 2009 and 29 per cent (so far) in 2010. As gold inches up, the upward potential will be less and less.
However, continuous dollar depreciation lends itself to a strong gold going forward. I feel that you could encounter some serious resistance at $1,500 level," MR Raghu, Senior Vice President-Research at Kuwait Financial Centre SAK (Markaz), told Emirates 24|7.
Despite its 192 per cent appreciation in five years, analysts do not see the gold bubble bursting anytime soon. "Given the level of uncertainty clouding global growth, I don't think it will burst though I would hesitate to call the current run up in gold as bubble," Raghu added.
Although experts agree that gold may already be in the overbought territory, they do not foresee a correction immediately.
"Looking at long term charts, we can clearly see the uptrend in gold. In the recent years, there have been only three major corrections of the uptrend. Before all of the corrections, certain indicators were at extreme values and this is currently the case as well.
"Therefore, it is possible to say gold is currently overbought but this does not mean the uptrend is over yet or correction will start immediately," Zeki Muderrisoglu, Fund Manager & Senior Technical Analyst, Asset Management Group at National Bank of Abu Dhabi told Emirates 24|7.
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