The gold price rallied 2.6% to a new high of $1,233 as the price of gold continued to benefit from the concerns over Europe’s ability to tame the sovereign debt crisis. The gold price has climbed 4.6% in May and 12.6% year to date.
Tuesday’s strength in the gold price came amid another rally in the US dollar while the Euro fell 0.8% to 1.2694 against the greenback. Its fall was affected due to the uncertainty over the structure and implementation of the European bailout plan. This resulted in investors and traders seeking out the safety of the gold with central banks continuing to turn to currency debasement to deal with financial and economic problems.
Tobias Merath, head of research in the private banking unit of Credit Suisse Group AG also predicted that the price of gold will trade between $1,250 and $1,350 by the end of the third quarter of 2010. While the next gold price target is anyone’s guess, the fundamental backdrop of gold remains quite favorable.