My 2012 Gold Forecast

An update to my last gold forecast in 2010

There are many variables that go into a forecast or prediction. Sometimes unforeseen events can play a major factor in the price movement of a commodity, including the price of gold in 2012. My last published analysis of the gold market was August 3, 2010. At that time, gold was priced just under $1200 an ounce. Based on my analysis then, I suggested gold could reach $2000, or possibly more, in 2011 or 2012. Gold did hit a recent high of $1925 on September 6, 2011. Since that high, gold, for the most part, has been in a correction. The last few weeks gold has started to rise again. As of this writing in January of 2012, gold is currently at $1732.

Implementing fundamental and technical analysis

The key to making the best possible 2012 gold forecast, is to properly interpret information market-wise. The two main sources of information are fundamental and technical. I believe to put the probabilities in your favor as much as possible, you should implement fundamental and technical analysis.

Technical analysis is a method of evaluating stocks, futures, and other securities by analyzing statistics generated by market activity. This would include past prices and volume. Technical analysts use charts and other tools to identify certain patterns that can suggest future market price movements.

Fundamental analysis consists of using real data to evaluate a security's value. For stocks, this can include earnings, sales, return on equity, and profit margins. Depending on what is analyzed, economic factors such as interest rates, and the overall state of the economy can be used. I will implement both technical and fundamental analysis for my 2012 gold forecast.

Gold looks to advance from strong fundamentals

Fundamentally, gold has some solid factors pointing to higher prices in 2012. The world's central banks are buying gold, as they seek to diversify away from the currencies of the United States and Europe. Another important factor is that exchange traded funds are buying more gold all the time. China and India are getting into gold more and more. There is no doubt that global demand is clearly outstripping supply. This is quite bullish, and will be reflected in my 2012 gold forecast.

The bull market looks like it will continue

Gold has been in a bull market for 11 years, and counting. It had a major correction in September of 2011, and went down to about $1550 an ounce. Technically, I'm looking for gold to solidly break above $1800, on strong volume. At that point, it should be clear sailing to test the September 2011 high of $1925. If gold can close above $1925 on strong volume, we could be off to the races, and see a $200 to $300 increase from that point.

Based on my technical and fundamental analysis, along with other pertinent information, my forecast is for gold to reach between $2125 and $2225 in 2012. If a major war breaks out, an example would be Iran, the price of gold could go much higher than my forecast. Crude oil could also explode in price.


Gary E Kerkow is a stock and commodities market expert. He is a successful trader and instructor, with over 20 years experience.

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