Gold price crosses $1400

Gold prices jumped to an 11-week high yesterday, pushing past the $1400 mark for the first time since June 7.

Gold has jumped by over $200 since it plummeted to three-year lows at June.

The decline came as the precious metal market went through a huge correction phase.

Investors usually look to gold as a safe haven during an economic downturn but the precious metal can bring uncertainty.

“Gold is not going to be a major attraction when there’s no inflation and interest rates are rising,” senior market strategist with iiTrader Bill Baruch said.

Some analysts predict gold prices will drop again after climbing 10 per cent in the last three weeks, the SMH reported.

“The gains were mainly from short covering. If gold can’t convincingly break above $US1400, we may see profit taking,” metal analyst at HSBC Howard Wen said.

Technical analysts believe gold’s breakthrough to above $US1400, and bullish prices could lead to more increases

Earlier this year economist at investment and trading company Gold Oz Neil Charnock forecast gold prices would plummet to between $1100 and $900 during the “correction” phase.

He said it would then rally to hit record highs again but until then he said falling prices would “cause havoc” to Australia’s gold mining industry.

According to online precious metals market BullionVault vice president Miguel Perez-Santalla, there were 22 per cent more sellers in gold than buyers in the three months from May to July, while there were 15 per cent more sellers than buyers in the US during this time.

The jump in gold prices come after a weak US durable goods report raised hopes the Federal Reserve will continue purchasing bonds to keep economic stimulus going.

The gold price increase came after data revealed requests for long-term US manufactured goods saw its largest decrease in nearly a year in July.

Proposed business expenditure on capital goods also declined.

Economic data from the US brought uncertainty over when the Federal Reserve would restrain its bond-buying stimulus.

The country’s interest rates have been at record lows and hard assets now seem more alluring than before.

Spot gold rose by 0.3 per cent to $US1403.40 an ounce. It stood at $US1406.10 at its highest.

US COMEX gold futures for December delivery stood at $US1393.10 an ounce, down $US2.70.

The World Gold Council (WGC) told the Diggers and Dealers mining conference high demand from China and India would drive up gold prices.

The WGC’s managing director of investment Marcus Grubb said the resources super cycle is not over but in a readjustment phase.

Silver climbed one per cent to $US24.22 an ounce while platinum rose 0.6 per cent to $US1542.49 an ounce.

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