Gold Prices to move 'much higher' if $1,000/oz is broken

A group of analysts at Full Circle Asset Management have predicted that Gold Prices will eventually move much higher if they can pass the $1,000 per ounce mark.

The psychological four-figure barrier has only ever been broken twice, once in March last year when prices hit a record $1,030 per ounce and once, albeit briefly, in February 2009.

Although Gold Prices have struggled to overcome resistance at that level, Full Circle explained that if they can push through a move to $2,000 per ounce would be feasible.

"Such failures, when overcome, generally lead to very big moves; historically, the longer the resistance resists, once exceeded the bigger is the move that takes place," they wrote in the Threesixty newsletter.

"In common with others, we have long thought that $2,000 per ounce was a reasonable expectation - although some say much higher."

The US government announced last week that it will sell 400 tonnes of its gold reserves to the International Monetary Fund, a move it has been negotiating for a lengthy period.

Responding to the news, UBS analyst John Reade aimed to play down fears that the transaction could have a negative effect on gold.

"There are lots of uncertainties regarding the sale but we do not expect this to be a negatively disruptive factor to the gold market," he told Reuters.

"If the gold is taken by other official sector buyers [it] could be a very positive development for the market."

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