The gold price has short term upside to $1260-1265, before it is likely to be sold off by investors.
The next sell-off is likely to see $40/oz come off gold I suspect, with it likely to consolidate around $1220-1225/oz, before it breaks out to new highs of $1350-1500/oz.
I suspect gold might be given renewed momentum with developments in Iran over the enrichment of uranium. Iran recently commissioned its first nuclear powered reactor, which is intended to help the country produce power. The country however makes no secret of the fact that it wants to enrich uranium. It argues that this is intended only to produce isotopes for medical purposes.
There is of course a big difference between 3%U3O8 and 98% weapons grade uranium. They will not be allowed to get that far. I suspect the country will face a change of government before that happens. The other compelling reason for gold reaching new highs is the debt liquidation in the United States, Japan and the EU. These countries can be expected to debase their currencies, and it will be the hard 'commodity' currencies which will attract most of the support. Don't be surprised however if this predicament results in the commodity producing countries hobbling their currency in order to retain a competitive exchange rate. There are several ways they can do this:
1. Retaining low interest rates (reduce the currency)
2. Stimulating the domestic spending (i.e. stronger import growth) by engaging in debt-spending
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Andrew Sheldon www.sheldonthinks.com