The price of the gold has been under constant bullish pattern since the year 2000. Gold, currently being traded around $1,650 an ounce at international market, may actually touch a price level of $2,000 per ounce by the end of 2013. Many market participants and analysts are skeptic over this perception on gold. Not surprisingly, unparalleled investment in the ‘safe heaven’ and monetary easing via bond/asset buying program would indeed provide required thrust to take the gold prices at sought level of around $2,000 an ounce, about 20% higher than current price level, by the year end.

With the ongoing unemployment rate of 7.8 percent in the U.S. and mild growth in the U.S. economic indicators, as furnished by the Federal Reserve (Fed), the central bank of America, the sizeable QE3 program would provide liquidity to the market via banking channel, cutting interest rates, which in turn would facilitate investment opportunities and eventually much needed employment. But, the cost that the economy would have to bear is ‘inflation,’ now at 1.4 percent. With this trade-off between inflation and unemployment, as the dollar index goes down, the market is expected to go for a safer investment zone and what could be a secured investment alternative than the ‘safe heaven’, i.e., Gold. 

To support above predictions, we could turn the pages of gold history, economic era from 2008 to mid 2011, which evidenced a rally of around 70 percent in gold prices amidst Fed’s $2.3 trillion debt buy back via combined two rounds of QE programs.

In line with the ongoing debt ceiling regime in the U.S., investors from around the world have already initiated to place bets on advances, which in turn, is providing an initial boost to gold prices.

With Fed set to exercise asset buy back, at least till the end of 2013, the enhanced price of gold seems inevitable. Further, moving off the U.S. economy, the ‘easy-money’ policies of European Central Bank could be another key factor pushing gold prices higher amid ‘cross asset liquidation’ regime from Euro area, eventually pushing gold to north from both sides of the Atlantic.

Note: This blog is just an expression of the author’s opinion and cannot be deemed responsible for any losses incurred.