A good part of gold's move this morning may be due to Goldman's sudden bullish outlook on gold that was just issued overnight. Supposedly, they issued a 9 page report supporting their call. Most unusual from this pack of banksters! Considering Goldman's shady track record on previous calls, gold may either rise sharply or be subjected to a major bear raid over the coming days. Either way it will be volatile whenever the kingpins of Wall Street get involved.

Regards - VHF

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Gold May Rally to Record $1,300, Goldman Predicts

August 12, 2010, 4:24 AM EDT

Aug. 12 (Bloomberg) -- Gold may rally to a record $1,300 an ounce in six months, driven by low interest rates and the prospect of renewed quantitative easing in the U.S., according to Goldman Sachs Group Inc.

“The recent selloff has left speculative long positions in gold oversold relative to U.S. real interest rates,” analysts David Greely and Damien Courvalin, wrote in a note yesterday. This has “set the stage for a rally to our six- month gold-price target of $1,300 an ounce,” they wrote.

The Federal Reserve has resorted to direct bond purchases, also known as quantitative easing, as part of its response to the world financial crisis. The U.S. central bank said this week that it would reinvest principal payments on mortgage holdings into long-term Treasury securities to support growth.

Gold for immediate delivery, set for a 10th annual advance, touched an all-time high of $1,265.30 an ounce on June 21. The precious metal was at $1,201.35 at 3:10 p.m. in Singapore.

Long positions are bets that prices may gain. Real interest rates are the difference between nominal interest rates and inflation.

Still, there may be a considerable risk gold will drop in the longer term if the Fed tightens monetary policy earlier than expected, the analysts said.

Goldman recommended buying platinum for October delivery on the New York Mercantile Exchange as recovering global automobile demand will likely continue to put “upward pressure” on autocatalyst demand, the report said.