As the safe haven of choice for investors during shaky times, will gold reach record prices again before the end of the year? On Monday, gold futures for December delivery rose to $1,799.90 , the highest since Sept. 21.
Barclays Capital’s forecast for the fourth quarter is $1,875 an ounce and the annual average forecast for 2012 is $2,000.
“We are bullish for gold and expect near-term buying interest near the daily cloud to underpin a move higher. A break above resistance at $1,775 would confirm our bullish view toward our target near $1,840,” the firm said in a research note Monday.
Around 1:33 p.m. EST gold futures rose 0.55 percent to about $1,801.
Jonathan D. Corpina, senior managing partner with Meridian Equity Partners in New York City, said the driver to the rising price of gold is “fear,” because it is global commodity that has always been considered a “safe haven” when the market gets choppy.
Much of the market’s turmoil is related to division among European Union leaders over how to deal with a debt crisis and Greece’s move to form a new government.
Lending between European banks has slowed in recent weeks amid concerns about the weakness of lenders and how a Greek default could affect the global financial system. Finance ministers met in Brussels on Tuesday but failed to come to any agreement over the 27 country-bloc, reported the Associated Press.
“When investors feel like there is turmoil in the global markets and there is uncertainty for the future, they immediately cut down their risk and exposure,” he said. “When you take your cash out of the market, where do you put your money after that? Investors want to invest in something that they feel is safer than the market, and something that they understand.”
On Sept. 6, gold traded at record high of over $1,923 an ounce in part related to uneasiness over the European debt crisis and the downgrade of U.S. debt in August.
After a recent pullback, gold has settled in the $1,650 to $1,800 range, and is recently at the higher end of that range, Corpina said.
He said investors should own gold as part of their portfolio diversification.
“With the continuing global economic uncertainty, I think that gold should continue to hold its value for the near future,” Corpina said.