QE3, the third round of quantitative easing announced by the Fed, could cause Gold Prices to rally, with the precious metal reaching an all time high of $2,400 per ounce by the summer of 2014.
BlackRock fund manager Evy Hambro has predicted gold prices to skyrocket through next summer, boosted by the latest round of quantitative easing by the US Fed. The first round of quantitative easing in early 2009 resulted in a jump in gold prices from $900 per ounce. Since then, the precious metal has been on an upward turn.
Hambro, who invests in gold and gold equities, expects gold prices to continue to climb in view of QE3 to reach as high as $2,400 per ounce by the middle of 2014.
In his research note released in the first week of October, Hambro stated, “The gold chart has turned decidedly bullish with the 50-day moving average rising above the 200-day moving average. The last time this happened was in February 2009, which interestingly was shortly after the implementation of QE1. Then, gold was $900/oz and never looked back. Should we witness a similar rally, prices would be taken to $2,400/oz by midsummer next year – and $1,760/oz would be the new floor.”
According to data released by the International Monetary Fund in October, central banks have continued to purchase gold and countries like Paraguay and South Korea have recently upped their reserves. Through last year, South Korea has increased its bullion assets by 100% by adding 16 tonnes of bullion in July alone.
Hambro added, “If the third round of quantitative easing leads to further weakness of the US dollar, central banks may be prompted to switch more cash reserves into gold.”
On November 1, 2012, things were up 9.7% year-on-year for gold prices.