GOLD PRICE NEWS - The gold price traded above $1,250 per ounce Tuesday morning, rising $6.00 to $1,256, rising within 1% of its all-time of $1,265 made in late June. Today’s gains follow last week’s 1.1% rise in the gold price - as measured by the December gold futures contract. According to the most recent data from the Commodity Futures Trading Commission (CFTC), speculative long positions in gold futures rose 8% last week. Investment demand remains strong for gold’s sister precious metal as well, as the silver futures contract gained 4.6% last week due to a 29% rise in “spec” longs.

Ashraf Laidi, chief foreign currency strategist at CMC Markets, noted that “The case for metals remains not that of outright inflation but that of central banks’ prolonged liquidity drives. Currencies will gain/fall versus one another, but fresh asset purchases will maintain gold and silver ahead.” Laidi forecasts that the gold price will reach $1,330 per ounce by the fourth quarter of this year.

ANZ’s head of commodity research Mark Pervan shares Laidi’s bullish outlook for gold prices, focusing on the positive tailwind emanating from China. In his latest piece, Pervan commented that “We see more upside for gold prices as the key drivers of a safe-haven and currency-hedge demand are joined by the emergence of strong investment and fabricating demand from China and India.” Pervan, who sees the gold price rising to $1,350 per ounce by early 2012, speculates that an upside surprise may emerge in the form of buying from central banks. “The bulk of emerging economies are overweight US dollars and underweight gold,” notes Pervan.

Investors continue to seek ways to increase their exposure to the gold price, one of a handful of asset classes outside of U.S. Treasuries that has posted strong gains in 2010. The share prices of gold producers and explorers have begun to accelerate to the upside, gaining at a multiple of the gold price in recent weeks. Small- and mid-cap gold stocks have seen the strongest gains, outperforming both the gold price and the large-cap gold miners. The Market Vectors Gold Junior Miners ETF (GDXJ) has rallied 29% off its mid-July low print, outperforming the 9% rise in the gold price over the same time frame. Small-cap gold stocks have offered investors three times leverage to the gold price on this most recent rally.

Goldcorp’s (GG) takeover offer for Andean Resources (AND.TSX) sparked a flurry of buying in the gold sector on Friday. Investors placed bets on who might be the next takeover candidate, driving shares of Extorre Gold Mines (XG.TSX), Canaco Resources (CAN.TSXV), and Rainy River Resources (RR.TSXV) up 16.7%, 12.5%, and 6.4%, respectively. Eldorado Gold (EGO), which presented Andean a takeover offer just hours before Goldcorp, has not boosted its $3.4 billion bid.

The U.S. economic calendar in the upcoming holiday-shortened week is light, although both the Bank of Japan (BOJ) and the Bank of England (BOE) meet to discuss the future direction of monetary policy. Given the recent deceleration in the pace of the global recovery, it is expected that both the BOJ and BOE will not only continue to keep short rates at exceptionally low levels, but also will introduce further stimulus measures to counteract the plethora of deflationary headwinds. President Obama will hold a news conference on Friday, where according to Barron’s, “he is expected to discuss some new ideas to stimulate the economy.”

Source: http://www.goldalert.com/stories/Gold-Price-1-Below-Record-High-