Forecasters Stay Bullish on Gold Into Next Year

The gold price bounced back above $1,600 on Friday, rallying $11.17 to$1,602.13 alongside the price of silver. While the price of gold advanced, gold’s sister precious metal climbed $0.52 to $39.85 per ounce, despite modest strength in the U.S. dollar. The euro currency fell 0.4% to 1.4371 this morning, following yesterday’s surge from 1.41 to 1.44 on the heels of the European summit on Greece.

Precious metals forecasters believe that gold will remain north of $1,500 for the balance of 2011, fueled by sovereign debt concerns in Europe and the weak economic recovery in the U.S.

According to the bi-annual Reuters poll of precious metals price forecasts, more than half of the 52 respondents expect the yellow metal to average above $1,500 this year. This is a significant change from the previous poll in January, when only 20% of respondents answered that way.

The poll returned a median forecast of $1,510 per ounce, up from $1,453 in January.

As for 2012, the median forecast was $1,575 per ounce, compared to $1,425 in the prior poll. As is clear from the data, not only do the respondents see gold remaining higher through year-end, but more importantly they no longer expect the yellow metal to decline next year.

Gold futures reached an all-time high record of $1,610.70 per ounce this past Tuesday.

Peter Buchanan, a Toronto-based commodities analyst at CIBC World Markets, commented that ”Even in the likely event Congress agrees to a debt ceiling rise, recent uncertainties are likely to reinforce central banks’ ongoing efforts to diversify from the dollar into gold and other assets.”