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Dollar Gold is Bullish with Targets at $2,400 by Mid-2013, Indian Demand Up

U.S. dollar prices for gold dropped 0.4 percent off new eleven-month highs in
Friday morning trading in London, dropping beneath $1,790 per troy ounce as stocks in
Europe climbed higher.

Wholesale prices for silver bullion dropped back below $35.00 per troy ounce,
though still gaining 1.1 percent on the week, with commodities flat and major-economy
government bonds dropping lower.

The release of the U.S. non-farm payrolls report for September, markets learned
that the unemployment rate in the U.S. has dropped below 8 percent to 7.8 percent for
the first time since President Obama took office. Stocks showed a strong rally as gold
dropped an initial $10 from $1,790 per troy ounce to $1,780 per troy ounce before
meeting solid resistance at $1,775 per troy ounce in late day trading.

Steve Barrow, a strategist with Standard Bank, said the labor market must
improve for QE3 to end. Should numbers not improve in a manner the Federal Reserve
anticipates it will introduce further measures.

Evy Hambro, co-manager of the UK’s giant Blackrock Gold & General mining-
stock fund, said if the third round of quantitative easing leads to a further weakness in
the U.S. dollar, central banks around the world may be prompted to switch more cash
reserves into gold.

The daily chart of gold prices in U.S. dollars has turned decidedly bullish,
according to Hambro’s team, with the 50-day moving average rising above the 200-day
moving average.

Hambro went on to point out the last time this occurred was in February 2009
after the implementation of QE1. At that time, gold broke $900 and never looked back.
Hambro believes that a similar rally in gold now will produce prices at $2,400 by
midsummer of next year.

Geopolitical tension currently tightening over the fighting on the Syria-Turkey
border is seen as giving further support to the gold prices, as well as the fast-spreading
industrial unrest in South Africa, a country home to the world’s sixth largest gold mining
output.

David Govett, a commodities broker at Marex Spectron, said the gold market
loves big figures and gravitates towards them. He said the $1,800 level may not be the
most important figure technically, but a breach of the level could see gold price rise much
higher in the $1,800-range.

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