Gold News

Will gold stay or will it go?

Gold prices last week enjoyed a series of rises, hoisting the value of the precious metal to well above the $700 mark, but experts are torn over whether it will stay there or undergo another radical burst of investment.

While many now speculate as to the possibility of gold soon hitting $750 per ounce, or even surpassing the $850 all-time high of 1980, an expert told Reuters that the precious metal may instead have reached a plateau.

Vice president of RBC Capital Market Global Futures, George Gero, said that "a lot of funds are long again, and if they don't get the interest-rate cut they expect, you could have a technical pullback in gold".

His more guarded outlook reflects the concerns of numerous stock-market players who fear that investors are getting ahead of themselves by taking for granted the eventuality of Fed rate cuts on top of the recent cut to the discount rate.

Also key is that market uncertainty behind the rise in gold investment has taken shape outside the commodities sector, with investors flocking to gold when concerns grew of a credit crunch resulting from the sub-prime mortgage fallout.

Shrewd investors are then well aware that for now the news is good, but that traders could take to selling gold again, in order to cover losses in other areas.

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