On Dec. 6 the price of gold on the New York exchange closed at an all-time high of US$1,423.70 an ounce. That's wonderful, but in the two days that followed profit-taking left the price closer to the US$1,380 level at press time on Wednesday.
Gold bugs are applauding the steady rise of the gold price in 2010, a year of uncertain economic recovery, particularly in the United States. As confidence in the U.S. dollar falls, investment in gold rises, pushing the price upwards. That is the most basic behind understanding what moves the price of gold.
Pundits who follow the yellow metal closely also factor in global indices of GDP, inflation, housing, manufacturing and consumer goods before prognosticating on the next price move. I won't attempt to do that. I am content that the upward move is solid, even if I have a little egg on my face after the price estimate I made at the beginning of the year.
Gold began 2010 by trading at US$1,121.50 on Jan. 4. I suggested we could expect a 10-15% rise in the gold price this year, and I asked CMJ readers for their opinions on how high the gold price would go. Just for the record, no one who responded to the Hot Topic question got it correct. Ten per cent thought the high would be $1,000-$1,100, 30% thought $1,101-$1,200, 33% thought $1,201-$1,300, and 12% thought $1,301-$1,400 an ounce. No one opted for $1,401-$1,500, although 15% of our readers were truly optimistic, saying they thought the price would be even higher.
Higher gold prices benefit Canadians looking for new mines or wanting to get the most out of existing producers, so let's hope the price remains strong.