Predictions For 2010 For The Price Of Gold

By Jack Wagon.

The price of gold is so uncertain because it changes each day. Its price is commonly related to the performance of the US dollar. The last few years have witnessed significant fluctuation in the price of gold. The value of gold has been increased by 400 dollars and reached 1100 dollars per ounce, from the year 2006 to the year 2009. A similar increasing trend is expected for the year 2010. This forecast has been based on the global economic trends; hedging tactics employed against the falling US dollar; and the inflationary rates.

During such circumstances, majority of the businesses face a downfall and have to go through a rough phase of crisis. A majority of investors have started showing interest in gold as a secure hedge against inflation. The shareholders of the stock market, have now diverted towards the commodity of gold to ensure a secured future, after bearing heavy losses in the stock market.

The main reason for the increase in the price of gold during the year 2010 is inflation. The gold prices excellently trail the inflation. Whenever the inflation goes up for a period of more than one year, the gold prices usually go wild. Moreover the decrease in the interest rate is also a contributing factor for the gold bull.

One estimate is that gold shall continue to trade with volatility above $1,000 per ounce for the period of December 2009, till the initial period of 2010. However, the chances are that the price may even shoot up to $1,500 per ounce by March 2010 and up to $2,000 during the later months. Even if this prediction is materialized, many people fear that this increase will be short-lived. According to other predicted estimates, the price of gold is bellowing downwards. The price of gold is expected to go below $800 per ounce following another short run up.

In addition to the increasing inflation expectations, there are many other factors such as a shift towards liquid assets, a rapid increase in credit risk, falling stock markets and a wave of monetary and fiscal policies that are remarkably contributing to fuel a rally in gold prices.

Therefore, one should contemplate thoroughly before investing directly in any commodity; many traders have been reported to be purchasing future option contracts, so that they have the liberty to speculate with leverage and would be able to manage risk at the same time. However, if for instance, an investor believes that the price would have a soaring momentum, he could avail the short termed profit.

It is rather impossible to predict the exact price of gold in 2010; but one thing is for sure that volatility and frenzied roller coaster trend is likely to prevail.

Another prediction by the Canaccord Adams is that the average price for 2010 of gold would be $1,300 per ounce. The reasons for this prediction include factors like devaluation of currency, rising inflation and the growing popularity of gold. While it is not possible to predict the exact price of gold in 2010 but according to analysts and their predictions the price will increase further for a short period of time.

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