Prices make a run for $1,900 an ounce as investors worry about an economic slowdown.
Gold prices shot to another record Friday as fears of a global double-dip recession sent investors piling into the metal. But many experts warn that time may be running out for the current rally.
Gold (-GC) for December delivery was skyrocketing $45.80, or 2.4%, to $1,867.80 an ounce at the Comex division of the New York Mercantile Exchange. Gold has traded as high as $1,881.40 and as low as $1,824.50, while the spot gold price was adding $43, according to Kitco's gold index.
Silver (-SI) was soaring $1.72 to $42.43 an ounce. The U.S. dollar index was off slightly at $74.23, while the euro was down 0.1% against the dollar.
Gold prices have risen more than 5% in just a week as investors gobble up the metal as protection against slowing growth around the world, from China to Germany to the U.S. A day after Morgan Stanley (MS) lowered U.S. growth prospects for 2011 and 2012, gold prices showed no signs of slowing.
Citigroup (C) also joined the fray, lowering 2011 U.S. growth from 1.7% to 1.6% and for 2012 to 2.1% from 2.7%. While growth signs point to the possibility of another recession, Bank of America (BAC) may slash 10,000 jobs, according to The Wall Street Journal, which is ominous for any attempt at a recovery in employment.
Investors don't really have a lot of options for "safe" places to stash cash, as Hewlett-Packard's (HPQ) dismal 2011 outlook was weighing on stocks. The popular gold ETF SPDR Gold Shares (GLD) added 15 tons Thursday to 1,286, but many experts are now bracing for a pullback after gold's explosive run.
David Banister, the chief investment strategist at ActiveTradingPartners.com, said gold will peak out at either $1,862, $1,880 or $1,907 an ounce.
"One of those three is going to peak out this parabolic blow-off-top rally and be followed by a great opportunity to profit by shorting," or betting against the metal, he said.
Banister, who thinks gold's long-term bull run is not over yet, said peaks are typically followed by 15%-20% corrections, which would take gold to the $1,500 level.
Bob Haber, the CEO of Haber Trilix, thinks that gold has not seen its final highs but that there are technical signals that are screaming overbought conditions.
"There has developed short-term bullishness which probably needs to be unrewarded, meaning a short, sharp correction," he said.
Of course, experts can't predict when that correction will come, but gold's status as a haven looks safe for Friday. A perfect storm of high inflation in emerging markets, negative real interest rates worldwide and possibly more currency debasement from central banks are all supporting gold prices.
Barclays Capital wrote in a recent note that "every outbreak of financial fears has coincided with a rally in investment demand for gold. . . . This has also been the case in the past few months: July data shows that gold ETPs saw the largest net inflows since May 2010."
The research firm remains bullish on gold, saying persistent economic uncertainty "bodes well for history's oldest form of wealth."
Gold mining stocks were rallying Friday. Barrick Gold (ABX) was gaining 2.3% to $51.00, and Newmont Mining (NEM) was soaring 3% to $60.15. Kinross Gold (KGC) was adding 1.7% at $16.72, and Goldcorp (GG) was rallying 2.2% to $51.01.
