Once gold made a solid move above $1,000 and then broke the record high around $1,018, many analysts began to increase their profit targets for gold. The popular price target for gold now appears to be $1,500 an ounce. If that level is taken out, I would expect $2,000 to be the next target. Before we get ahead of ourselves thinking this move is a lock, let's see why the market might continue moving higher.
The main reason for gold moving higher is the dollar is losing value. The underlying cause of the dollar weakening and a flight to gold is the Fed is printing money like crazy and the federal deficits are swelling out of control. Few have faith that the government powers will get this under control and that is a perfect recipe for rising gold prices and higher inflation down the road.
The government will always downplay these issues, but don't fool yourself and think they aren't a problem. The problem with estimating price targets for gold is that it there are too many differing variables that cause the price to move. Most commodities can normally be valued from a simple supply and demand equation, but gold is influenced by many financially related issues that are difficult to quantify.
The most logical way to value gold is to look at the big picture. Gold should continue moving higher in the long-term as long as the underlying problems are still in existence. As long as the government keeps the printing presses working around the clock and interest rates remain near zero, gold should continue moving higher. It is anyone's guess how far this market might run.