Gold Bullion Rises above $1000 for the First Time Last Week - What is the Future?

Gold bullion reached the $1000 mark for the first time ever. Following recent predictions that they gold sector would continue rising, the markets followed suit. While the rest of the stock market continues to fumble, the precious metals markets are seeing some of the best day’s in history.

The biggest link for the rise is due to the failing economic systems and the movement towards the considered ‘stable’ investment of gold. Gold is not as easily created as a Euro or a printed dollar, creating a sense of comfort among many world investors. The dollar falling below the value of the Euro this week has also contributed to the success of the precious metals markets.

So far, gold has gained nearly 20% in value in 2008. It is thought that in the coming weeks, that there may be a correction as investors seek to capture some of their short term profits. If this occurs, the market is expected to dip slightly below the $1000 mark, but over the mid term, is expected to see pricing above $1005. Some economists are now suggesting that pricing could hit as high as $1020 or $1030 by mid year.

With further and continued speculation of additional US interest rates and the continuing decline of the dollar, the gold market and precious metals markets as a whole are considered a prime buying opportunity. Investors and speculators are both bullish on this market segment and the sector should continue to see a high volume of trading activity.

The markets are not the only sector seeing an increase in activity; the gold jewelry sector is also on the rise with many consumers looking to profit on the rise in gold value around the world.

The rise in gold within the US markets is causing markets around the world to also experience steady and in some cases, sharp rises in value. Another effect that is causing the prices of gold to rise around the world it the rising cost of oil. Hitting a record price this week, oil is spurring the economy and investors to purchase additional commodities across all markets and all market segments.

Many economists and analysts had predicted in 2007 that the price of gold would rise in 2008 to over $1000; yet many do not have predictions long term now that the price has been achieved. Most still believe that there is a bull market, yet there continues to be the lingering concern of a short term correction.

Many investors are concerned with cash flow and investment loss with the uncertainty of the US economy. This uncertainty has the potential to create an ‘irrational exuberance’ type of investment behavior among investors, especially among those that are investing into the gold market for the first time.

If that is the case, emotional investors are likely to pull their profits early, nervous about the potential for long term gains and the security of their capital. If this irrational behavior becomes a widespread trend, the short term correction expected within the gold market could be longer than currently anticipated.

Even if a short term gold market correction is on the horizon, it is unlikely to have much impact on the year’s positive predictions for the prices as a whole.