Launch a third round of quantitative easing (QE3) – and the better the gold price outlook becomes

The gold price soared to yet another record high early Wednesday, surging as much as $11.50 to $1,672.80 per ounce before backing off to trade just under the $1,660 level. The price of gold has gained $165, or 11%, since the end of the second quarter, bolstered by a slew of soft economic data in the U.S.

Investment demand for gold, silver, and other precious metals such as platinum and palladium, continues to rise while the appetite for conventional stocks falls.

Even central banks have recognized the place precious metals should occupy in a portfolio, evidenced by this week’s news that the Bank of Korea recently purchased $1.24 billion of gold. The SPDR Gold Trust (GLD), a proxy for the gold price and the world’s largest gold ETF, traded to a record high early Wednesday, rising $0.00 to $162.00 per share. COMEX gold futures, per the December contract, reached a fresh record high of $1,675.90 per ounce.

Yesterday’s gold price rally and weakness in the broader markets followed the latest in a series of disappointing reports on the status of the U.S. economy. Personal spending for June fell 0.2%, below the 0.1% increase expected by economists. This marked the third straight trading day of worse than expected economic data – following Monday’s ISM report and last Friday’s GDP data. The worse the economy becomes, the more pressure is likely to build on the Federal Reserve and Chairman Bernanke to launch a third round of quantitative easing (QE3) – and the better the gold price outlook becomes.