Fundamentally bullish on gold, regardless of recent trends

As for the gold price, Dr. Martin Murelbeeld, chief economist at Dundee Wealth Economics predicted that it “will likely trend sideways, within a fairly wide band, until such time as the ECB/EFSF readies the aforementioned bazooka, which it will inevitably have to do when a major bank default occurs.” Murenbeeld – a long-time gold bull – also noted that “We are fundamentally bullish on gold, regardless of recent trends.”

“If 2008 is a guide then there is a chance” that the gold price’s 200-day moving average “could be tested in due course,” Murenbeeld contended. “Pressure continues to build for a European policy response however, so we cannot rule out a sudden updraft in the gold price on the back of new monetary policy initiatives in Europe. Leaders seem to agree that something needs to be done but, as of yet, the ‘bazooka’ is nowhere to be seen.”

David Rosenberg – another long-time gold price bull – offered similar advice for Europe in a note to clients on Tuesday. “No doubt it is good to see EU policymakers shift from denial to acceptance but the reality is that the extent of the bank recapitalization needs to far exceed any government’s capacity to remedy the situation in its entirety.”

The gold price climbed $16.51, or 1.0%, to $1,678.76 per ounce Wednesday afternoon amid a broad-based rally on Wall Street. Strength in the price of gold was fueled by a decline in the U.S. dollar against a basket of foreign currencies. The SPDR Gold Trust (GLD), a proxy for the gold price, rose $1.43, or 0.9%, to $163.53 per share.