Will the Price of Gold Hold or Fall?

Early this week, the price of gold touched $1610 per ounce and then dropped to $1601. Analysts said that the need for safety had reduced and investors were venturing into the stock markets If the European and the US debt crisis can be resolved; it would set the minds at rest and bring down the price of gold.

One reason why there is more confidence in the stock markets is because many of the blue chip companies such as Coca Cola and IBM have declared good Q3 results.  Another reason for hope is that there might be a solution in sight for the US debt, as President Obama has okayed a deficit reduction plan.

The price of gold has been surging recently and analysts say that the price of gold declines slightly after a big increase.   Market watchers warn that just as concerns over the European and US debt crisis pushed up the price of gold: the price of gold will dip once these issues are addressed.

Last week, Barclay’s raised its forecast of the price of gold saying that the gold prices would go up because of the European debt crisis and the fear of inflation.  But Barclays also cautioned investors that silver and gold prices were likely to go into correction if the debt problems are resolved.

As of now the price of gold has soared over what was estimated by Barclay’s.  The gold prices have been going up in both the dollar and the euro as most investors feel that the debt troubles may not be solved.    Debt issues are also rising up in other countries as is shown by the recent downgrade of Italy’s debt by Moody’s.

Analysts feel that most of the measures taken so far were not effective and the real problems have been shelved.  As long as there is no real solution to these issues, the price of gold will continue to go up.