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A look back : gold in 2011

As we wind down the year gold and silver have both been relatively quiet following the Christmas holiday with low volume and thin trading. Prices have stabilized just under $1600 per ounce. Assuming no large scale moves before the end of the year, gold will have posted its tenth straight year of gains, tacking on over $200 per ounce year to date.

2011 has seen both new highs and heightened volatility in the gold market. In the opening months of the year revolutions and unrest in the Middle East dominated global discussion. Concerns about oil supplies being interrupted by the “Arab Spring” helped push the entire commodities sector higher through the first half of the year. Gold followed in suit, rising from the low $1300’s to nearly $1550 by May.

The months of May and June were relatively quiet as gold’s “summer vacation” came a bit early this year. It wasn’t long before the uptrend developed again and set the stage for gold’s most impressive month over month performance to date. As concerns about European debt came back to the forefront in July gold moved sharply to the upside, assisted by the shameful debt ceiling debate here in the US. As politicians haggard both here and across the Atlantic, gold skyrocketed, tacking on more than $400 per ounce in less than 70 days. An all-time intraday high of $1924 per ounce was struck in early September, before prices began to subside again into a corrective stage.

With the debt ceiling debate tabled here at home and the crisis in Europe escalating, a major shift occurred in global investment strategies in the last quarter of the year. Whereas the US dollar had been under attack from all sides for months, the Euro reemerged as the new kid to pick on as debt contagion concerns continued to cause significant damage to risk appetites worldwide. Strangely enough, the decrease in risk appetite actually harmed gold significantly as the US dollar became the main beneficiary of economic uncertainty. As a result of the turmoil in Europe, the US dollar rallied to pre-2007 levels in the last quarter of the year, driving gold back down into the consolidative trading range between $1550 and $1700 in which we find it today.

So what’s in store for gold in 2012?

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Posted by on Dec 29 2011. Filed under Gold predictions. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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