gold price climbed $7.10 to $1,523

The gold price climbed $7.10 to $1,523 Wednesday after China raised interest rates for the third time this year. The price of gold fell as low as $1,510 per ounce before bouncing back above $1,520 after the People’s Bank of China announced that the one-year lending rate will rise to 6.56% from 6.31%, effective today.

While gold dipped $5.50 to $1,510.50 early Wednesday morning, the outlook for the Gold and companies that mine gold is improving according to a growing number of investment strategists and analysts.

In a research note published yesterday, CIBC World Markets’ technical team highlighted a number of reasons why the gold mining sector is currently attractive:

“June/July is historically a trough period for gold stocks (historically returning -1.5%), but this trough is usually followed by a nice rally in the later half of the summer months”

“80% of materials stocks are currently in a consolidation phase that has been ongoing since Nov/Dec of 2010 (long in the tooth….). What does this mean? It’s time to buy some gold stocks as we expect them to gradually move higher from here.”

“Some of the names that Sid noted are particularly oversold include ELD, SMF, AGI, and AEM. Eldorado is the name that exhibits the most oversold conditions and we recommend this name to be bought aggressively at these levels. The name also ranks very well from a fundamental standpoint, comes with a peer leading growth profile, and is Barry’s top pick (SO Rating, US$23 target)…Bottom line, buy gold.”