Gold bulls have come out of hiding and are returning to the market, MarketWatch proclaims, and some experts predict the precious metal could surge to new highs.
“Gold remains one of the best long-term safe-haven investments for the risk-averse investor despite some declines in price at the end of 2012,” David Beahm, vice president of precious metals firm Blanchard & Co., told MarketWatch.
“With as much uncertainty as there is today, and with quantitative easing and fiscal stimulus programs providing only a temporary fix, gold is poised to achieve new highs, somewhere north of $2,000 in the coming year.”
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Comex gold futures reached $1,678 on Thursday and $1,676 on Friday, a sign of encouragement for gold investors given the metal's recent performance.
Gold prices declined month-on-month in October, November and December, MarketWatch reported.
While the metal ended 2012 tacking a 12th year to its bull run, the gains for the year were the smallest since 2008. Of further disappointment to many investors has been gold's lack of direction and upward momentum this year.
However, gold rallied Thursday following news that the European Central Bank decided to hold interest rates steady. The move was aided by a rising euro and weakening dollar. Providing a further boost was positive economic data from China.
With gains of over 1 percent, gold erased its losses for 2013.
But, even as prices stabilize, the precious metal may not do much for a while, MarketWatch warned.
The metal's poor price performance has sucked some of the enthusiasm out the market. Some investors have lost interest and set their sights elsewhere.
Others are questioning gold's role in their portfolios. The metal is often considered a safe haven and some are seeing indications of a reduced need for protection.
Furthermore, despite some volatility, the dollar is not faring nearly as poorly as some suggest it should. A stronger dollar makes gold more expensive in other currencies because gold is priced in dollars.
Though gold inched lower Friday, Reuters said the metal was headed for its biggest weekly gain in more than a month.
“[V]olatility will be a major component of the markets” and that includes gold, “but counter-intuitive price swings to the downside should be viewed as buying opportunities as the market moves back upward over time,” Beahm said.
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