For the sixth straight day, gold set a new record Friday, and for the seventh straight day, silver returned to highs not seen in 31 years as continued concerns over debt, oil, political unrest, and the U.S. dollar haunted investors.
Reuters reported that Friday saw new record prices for spot gold touching $1,512.50 per ounce before dropping back down to $1,507.69 in early European trading; it looks set to record a gain of 1.5% for the week in a fever that has taken its price to new heights for six straight days.
Silver outpaced gold in its race to the top, revisiting territory it has not seen since 1980 and coming in at $46.69 per ounce. If the day ends the way it began, silver will have risen 8.4% for the week, the largest weekly rise in two months. So far this year alone, silver has gained 51%; gold, in contrast, has added 6% for the year.
Debate continues over whether the ride will continue to be that of a rocket or whether it will turn to a roller coaster and plummet under pressure. While many analysts and traders said that a correction could be in store soon, calling the precious metal overbought, others say that there is still steam to power the ascent higher: after all, the worries that drove prices up have not abated.
Li Ning, an analyst at Shanghai CIFCO Futures, was quoted in the report saying, "Gold is likely to consolidate around the $1,500 level next week. The angle of the recent rally is very sharp, and we are bound to see some correction in the near term."
Still, Li believes that the price will peak by the end of the second quarter at around $1,550, driven by persistent worries over world troubles.
On the other hand, Barry Schwartz, vice president and portfolio manager at Toronto-based wealth manager Baskin Financial Services, was cited in the report as believing that the market may have reached its peak and that now is the time to sell while buyers can still be found.
The Relative Strength Index (RSI) for gold is hovering near 75, where it has not been since October. This suggests that gold is heavily overbought. Even more indicative is the RSI for spot silver, which is near 89, its highest level since April of 1987.