Gold's run-up from $250/ounce in Spring 2001 to it's recent (almost recording setting) peak of $848/ounce on November 7th has been nothing but sensational.Gold's long-term fundamentals leave little room for interpretation. Production supply problems have emerged, speculative demand is surging, crude oil prices show no signs of cooling off, and the US dollar is being bombarded. These fundamentals will continue to drive gold prices during 2008.In the short-term gold appears to be slightly overbought and we may continue to see a bit of consolidation. However, short investors, which are now exposed to losses in the billions, will likely take the opportunity to close their positions consider the overwhelmingly bullish fundamentals on any major dip in prices. This will be very supportive of gold and will help buoy a profit-taking correction. In December, we expect gold prices to average $775/ounce. The precious yellow metal is unlikely to spend too much time, if any, below the $750 level. From there we expect continuing price increases during 2008. After a few weeks of solidifying a price base above $800, gold will likely rise to break it's 1980 record of $850/ounce. Simply based on what we see in the charts, it's likely that gold prices could even soar to over $900/ounce in mid- to late-2008.Gold prices are showing no signs of looking back. The long-term underlying trend remains incredibly bullish. While being supported by the still developing and deepening housing and credit crisis, the ailing US dollar and rising oil prices will continue to be the main drivers of a surging gold price in 2008.
Luke Burgess and Greg McCoachGold World Research Staff
Labels: Gold
