The spot price of gold is $1188 an ounce at 9:40 AM in London.
Since May the 14th prices have continued to dip:
"For all of the chaos over the last couple of weeks (events that we are more accustomed to driving the yellow metal higher) the price has failed to make new highs and we are now some 60 bucks from the highs," says Simon Denham at spread betting specialists Capital Spreads.
"We can speculate that there may now just be too many longs around. 1182 and 1155 are critical levels at this time as each represents lows from previous small sell offs.
"If we get below these points then there may be more in the selling pipeline to come. On the up side 1200 (even though it is a suspiciously ‘neat’ number) is actually something of a support/resistance level. If we can get back above here and close there then the bulls will be a touch more comfortable," says Denham.
Goldman Sachs says top of cycle has been reached
Gold prices are likely to continue to rise into 2011 but are getting close to the top of their long term cyclical highs.
Speaking at the World Mining Investment Congress, Jeff Currie, global head of commodities research at Goldman Sachs, said that there is a very sustained and strong correlation between the price of gold and real interest rates.
"If the real interest rate starts to go down, commodities priced in that currency should go up," he says. And, as proof of this he says, last week, the only currencies in which gold didn't hit all time highs were the Canadian and Australian dollar. "And, it is these countries that have already seen a rise in real interest rates, in the sense that those central banks are already in a tightening cycle."
But, some are of the opinion that the gold price has further to go.
Standard Bank analyst Walter de Wet says investors continue to buy gold despite the emergence of details surrounding the $1 trillion rescue package that is being readied for struggling eurozone states.
He explained: "There's still very good support for gold. The current bailout is just a sweetener.
"We'll need to wait and see whether they put in place actual measures to prevent eventual default."
Financial expert Andy Davidson, an analyst at Numis Securities, one of the UK's leading independent investment brokerages, also believes that gold prices will be boosted by the efforts of many countries to tackle their public spending deficits.
"Long-term fundamentals are supportive, with the repeated and ever-larger government bail-out programmes adding huge inflationary pressure to the major currencies over the long-term," he told the Press Association.
But, as Jeff Currie at Goldman Sachs has already pointed out - should inflationary pressure start pushing up interest rates then the gold rush is over.
