Gold Gets Its Shine Back Up 10% For The Year

2011 has ended and a new year of new battles begins.

Gold has been an incredible investment and trading tool this year. As the markets closed, Gold futures ended up, rebounding after dropping nearly 5% over the past six sessions to end a tumultuous year with a gain of 10%. The drop is mostly accounted for by profit taking and year end repositioning. Many brokers, fund managers and institutional brokers need to either realize the profit in 2011 to show their profit/loss ratio for the year, many others need to reposition their trades to have capital to invest come next week and others were just taking profits to close out the year. This took place all week, as the week and year drew to an end, the traders re-entered the markets to drive the price of Gold futures back up for the day and the year.

The February gold contract shot up $25.90, or 1.7%, to settle at $1,566.80 an ounce on the Comex division of the New York Mercantile Exchange. This is down from the high just a few months ago 1916.00.

Gold for the 4^th quarter lost 3.4% but still closed the year with a 10% gain over last year. Not many stocks, bonds, commodities or currencies offered that return in 2011.

Economist and market analysts blamed the recent decline in gold on year-end book squaring but yesterday, the lower gold prices allowed investors a chance to buy back into the market.

With a backdrop on continued uncertainty over global economic growth and the euro-zone debt crisis gold is predicted to surpass the 2000 mark in 2012.

While traders in New York futures are the least bullish in 31 months, the average estimate in a Bloomberg survey of 44 traders and industry professionals is for gold to rally 40% to $2,140 an ounce in 2012.

The divergence of views is widening after prices fell 19% from a record close of $1,900.23 on September 5, or 1 percentage point away from a bear market. Some investors retreated to cash amid a $10-trillion slump in global equity values since May.

Many traders including Billionaire George Soros have called this the “Ultimate Asset Bubble”, this may be true, as long as you enter low and sell before the market tanks, there is room for high profits, or at least that is the view of the markets. Sitting at 1566.00 as of January 1, 2012 with expectation of the market surpassing the 2000.00 point who can overlook this profit potential.