Gold prices may cross $2,000 (Dh7,346) a troy ounce this month as investors chase the ultimate safe haven with renewed vigour following a raft of bad news in the United States and Europe, most of which point toward a faltering economic recovery, according to commodity experts.
"If gold crosses the resistance level of $1,917 an ounce, it would almost immediately reach the targeted level of $2,000 because investors are fast losing their confidence in riskier assets such as stocks," Sajith Kumar P.K, chief executive of Dubai-based commodities trading firm JRG International told Gulf News.
On Friday, gold prices rallied to close 2.61 per cent higher at $1,876.90 an ounce as global markets witnessed a selloff.
Investors dumped stocks on fears that the United States, the world's largest economy, was heading towards yet another recession. The Labour Department on Friday said US payrolls were unchanged last month, the weakest reading since September 2010 and worse than the median economist forecast that called for growth of 68,000.
As a consequence, the S&P 500 fell 2.5 per cent to 1,173.97 at the close in New York and the Stoxx Europe 600 Index lost 2.4 per cent.
The renewed fears over Europe's sovereign debt issues and slowing economic growth in the Eurozone are also supporting gold as investors are moving out of riskier assets fearing greater downward movement.
Pradeep Unni, senior relationship manager at Richcomm Global Services DMCC, a Dubai-based commodities' trading firm said $2,000 an ounce for gold is just a psychological barrier and is likely to be crossed far sooner than what was earlier envisaged.
"The key point is that there is no roof to this rise. If Fed announces Quantitative Easing-3 or anything similar to that, this level should be here by the third week of September. In addition to economic fears, festive demand in the next few months from India and Middle East is likely to add further momentum to [the] upside," Unni said.