Gold's previous forays over the $1,000 an ounce mark didn't last long, but this time the yellow metal has been more resilient. It hit $1,020 last week, helped by miner Barrick Gold's decision to close out its short positions on gold.
Barrick had hedged against a drop in prices by selling gold short, which was fine when prices were stable to falling but proved a "multibillion dollar (and growing) liability" as the bull market became entrenched, says Bill Fleckenstein on Moneycentral.msn.com.
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But the longer-term outlook is strong. Recent gains against a wide range of currencies suggest that as central banks debase their currencies by printing money, gold's role as the ultimate store of value is being gradually rediscovered.
Moreover, central banks are set to become net buyers for the first time since 1998, supplies are tight and Chinese retail investors are now being allowed to buy gold, which should boost demand, says David Galland of Casey Research. Buy on dips.
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