To the shock of those observers possessed of a more conservative mindset, gold has risen above $1,600 an ounce for the first time ever, in a continuation of the seemingly non-stop bull market.
On 18 July, the nominal barrier of $1,600 was breached decisively in spot trading, as investors became jittery over a lack of resolution of both the US and Eurozone debt crises.
Several economists have already expressed the view that this sharp climb could continue, as neither the US government nor the Eurozone nations showed any sign on 18 July of reaching on a solution on how to solve their respective financial problems. Indeed, analysts at Capital Economics suggested; “If people seriously thought that there was a good chance that the euro itself would not survive, the associated flight to the safety of gold could easily see prices surge well above $2,000”.
Despite a last minute deal to restructure Greek euro debt announced on 22 July, the package still looks set to drive investors in search of safe havens. Private investors will be forced to contribute to the new bailout of Greece– making it quite possible that those with assets tied in to fiat currencies will seek a more durable alternative.
Some analysts seem to think so – following the breach of $1,600/oz, Michael Jansen of JP Morgan suggested; “I think it was the foundation for people to start thinking that maybe gold’s not headed to $1,650 an ounce or $1,700 an ounce—maybe it is headed toward $1,800 an ounce or even $2,000 an ounce”. If this prediction is correct, gold could become even more sought after.