Gold outlook 2010 – 2011

Gold prices hit a record $1,264.90 an ounce in late June 2010, as concern over the ability of several European countries to finance their debt burdens destabilized the euro and sharpened volatility across financial markets, fuelling an investor flight into the perceived safe-haven asset. Gold prices are set to mark an eleventh year of gains in 2011 as investors seek refuge from an uncertain global economic outlook , with analysts revising expectations sharply in a survey released on Wednesday

Outlook for Gold 2010 to 2011

For 2010, expectations for gold have risen 4% to a median $1,197 an ounce from $1,150.50 in January, when market watchers were forecasting prices to rise this year before plateauing in 2011. The extent of the rise and fall will depend on the amount of non-monetary gold imported for processing and then re-exported. Looking at global production, ABARE said it saw 2009 up 6% to 2553 tones, the highest level for six years.

“In 2010-11, Australian gold production is forecast to increase by 10 per cent to 267 tonnes. “In 2010-11, higher Australian gold mine production is projected to lead to export volumes rising by 19 per cent to 449 tonnes.

“The ramp-up of the Boddington redevelopment is expected to be the largest contributor to this growth; however, a number of new projects are also expected to begin production.  In 2010 the gold price is forecast to rise by 11% to average $US1080 an ounce, ABARE forecast.

How gold will perform in 2011 – 2012

A poll of 55 analysts and traders showed expectations for gold prices in 2011 have risen nearly 7% to a median $1,228 an ounce, from a forecast of $1,150 in a similar survey conducted in January. Several governments including Greece, Spain and Portugal have imposed austerity measures to cut their deficits, which has injected a degree of confidence into the equity markets, where investors expect earnings to paint a picture of improving business investment and economic growth. While this optimism has lessened the need of investors to protect their portfolios against more volatility with gold, fear of slowing overall growth has persisted

Longer term, the market could face headwinds that come with a sustained economic recovery as global interest rates could rise, denting the appeal of gold, a non-yield bearing asset. “The market is expected to derive strength from further economic pitfalls and the near-zero interest rates maintained by the US Federal Reserve,” said Harish Galipelli, head of commodity research at JRG Wealth Management India.


So far this year, gold is up nearly 9% at around $1,190 an ounce, putting it on track for its tenth successive year of gains by end-2010 . Goldbacked exchange traded products, such as the SPDR Gold Trust — the largest of its kind — saw hefty inflows in April and May as investors bought the metal to protect against the eurozone sovereign debt crisis, while national mints reported strong demand for bullion bars and coins.

Price of Gold Forecast and Prediction for 2011?

There is no definitive answer to where the price of gold will be in 2011. The best an investor can do is to look at possibilities based on historical data. If an investor assumes that paper currency will continue its debasing trend, what would be a high estimate on gold prices per ounce? To answer that one needs to look for the highest that gold has been in the past.

January 21st, 1980 saw the price of gold reach 850 US dollars per ounce. To understand how much money this is worth today one would need to adjust the figures according to the Consumer Price Index. 850 dollars in 1980 is worth 2,250 US dollars in the year 2010. If gold were to repeat the value of a previous high it could double from the price it is trading at in June of 2010.

Other analysts suggest that because the current economic output is many times greater than 30 years ago, the peak price of gold could even reach 5,000 dollars per ounce.

On the other hand the argument could be made that markets are based on mass psychology and trader emotions. Some might suggest that the average person would not believe that the price of gold could ever reach up to 5,000 dollars, thus creating a resistance to that level ever being achieved. Some analysts believe that as the market recovers in 2011 and beyond, the price of gold will retreat dramatically as the economic woe gets pushed to the backs of people’s minds and their hedging tactics are tossed aside.