Gold was up about 2% at mid-day Tuesday and traded near $1,512 an ounce on the Comex division of the New York Mercantile Exchange. A number of factors, including concerns over inflation, could push the metal up to $1,600 an ounce by year-end, experts say.
“Gold’s been trading up and down at about the $1,500 an ounce level,” said Thomas Winmill (left), portfolio manager of the Midas Fund (MIDSX) and the Midas Perpetual Portfolio (MPERX), in an interview.
In the first six months of the year, gold has risen 5%, according to Standard Chartered. “We expect it to trade around $1,600 an ounce by year-end,” Winmill said.
Recently, gold has traded up when news surrounding the Greek-debt crisis has been negative. Likewise, with a reported increase in the amount of loans held by Chinese banks, interest has risen in the precious metals, the portfolio manager says.
“There are many factors at work here. But if the Chinese government is expected to spend less on U.S. dollars, that is positive for gold,” he explained.
Still, the U.S. dollar and gold do not always trade in different directions. “Both are seen as ways to avoid risk, so they can occasionally move in same direction,” Winmill said. “But gold is mainly denominated in U.S. dollars, so fundamentally they move in opposite directions.”