Gold gains almost $6 on Concerns Egyptian Revolution will Spread (GC in Marketwatch)

2 February 2011  MarketWatch

Meanwhile, despite gold’s 6% fall in January, “absolutely nothing has changed with regard to the fundamentals of the gold market,” said Mark O’Byrne, director at GoldCore, in comments emailed earlier Tuesday. “The January price fall is nothing more than another correction and consolidation and is to be expected after the 30% rise in dollar terms seen in 2010,” he said. And “the geopolitical events in Tunisia, Yemen and Egypt provide another important catalyst for higher gold prices in 2011.”

The concern is that “we could see geopolitical contagion and the crisis spreading to the undemocratic oil rich states of United Arab Emirates, Kuwait and Saudi Arabia,” he explained. That could lead to an oil crisis and higher oil prices and, as he points out, “the two oil shocks of the 1970’s saw gold prices rise by more than 20 fold in just 9 years — from $35/oz to $850/oz.” Given all that, gold may perform again as it did in the 1970s, he said. “A 20-fold increase form trough to peak would see gold rising to over $5,000 an ounce in the coming years.”

http://www.marketwatch.com/story/copper-nears-record-high-gold-inches-up-2011-02-01?pagenumber=2