From the July 01, 2010 issue of Futures Magazine • Subscribe!

Gold prices skyrocket

Gold hit another record high of $1,254.50 per ounce on June 8, and analysts say that economic conditions mean that it could keep climbing.

“As stimulus packages begin to take hold, there seems to be some inflationary possibilities,” says George Gero, vice president of global futures at RBC Wealth Management. “The violent changes in currency values, whether it was the yen, the Swiss franc or the euro, caused people to think about a safer haven, so the allocation to gold increased by investors. The former euro holders started to pile into gold as the euro made new lows after the upheavals in Greece,” he adds.

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Rich Ilczyszyn, senior market strategist at Lind-Waldock, says, “The high in gold is not in. In the next couple of years, you’re going to see higher prices. Everybody’s looking at the S&P, waiting for the shoe to drop, and if that were to happen, gold would spike short-term.” He sees gold above $1,300 by mid-July, if the equity market stabilizes. “If we close below 1036 in the S&P, there’s more pressure in the stock market, or equities sell off dramatically, gold has a shot to take off,” he says.

Gero sees $1,250 as resistance and $1,175 as support in gold through the rest of the year.

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