Why The 1,200 Dollar Level Is Important To Gold…

A gold price listed north of 1,200 dollars might be more significant than you think.

Last week, gold closed off higher than 1,200 dollars per ounce on the Comex for the first time since the 22nd of May. That happened on Thursday, when the yellow precious metal had its best trading day in 5 weeks. The fact that the gold price was able to do so, is quite the performance in itself.

The breakout above 1,200 dollars came at a time, namely, when the gold price usually has its low point of the year, according to Frank Holmes, chief executive and chief investment officer at U.S. Global Investors. Often the gold price increases by up to 20% from a level like this, Frank told Marketwatch.

Earlier this month, futures ended up around 1,170 dollars per ounce, which is close to 1,150 dollars per ounce; the lowest level this year.

Volatility gold

Thanks to the ‘DNA of its volatility’, it is normal if gold would move around 15 percent from its lowest levels, says Holmes, who did not specify whether gold reached its bottom. Nevertheless, he is leaning towards gold increasing in value, and he feels it is reasonable to expect gold to go to 1,350 dollars per ounce by the end of the year.

In the second half of the year there are bigger events / holidays, which have an impact on the amount of gold consumers buy, like the Ramadan, for example, or wedding season in India or Christmas, says Holmes.

Holmes continued that China could also be surprising the gold market this year. China is positioning itself as a price maker in the gold sector. The physical market has moved to Shanghai and to attract banks, China needs to create a tax free zone.