2012-03-21

Tremblay maintained her 2012 and 2013 gold price targets of $1,850 and $2,225 per ounce, respectively

The gold price fell $10.57, or 0.6%, to $1,653.05 per ounce on Tuesday amid broad-based weakness on Wall Street.  Silver fared worse than the price of gold this morning, dropping $0.50, or 1.5%, to $32.45 per ounce.  U.S. equity markets moved lower as well, with the S&P 500 Index sliding 0.5% to 1,396.50.  Analysts attributed the sell-off to concerns over a slowdown in Chinese economic growth after the nation increased fuel prices by the most in two years.

Despite the recent weakness in gold price, the longer-term outlook for gold and silver remains bright, according to BNP Paribas.

In a note to clients published this morning, gold price strategist Anne-Laure Tremblay wrote that “The correction in gold prices, was initially triggered by Bernanke’s semi-annual testimony to Congress, in which he made no specific references to QE3. Sentiment towards gold was hit by more elusive timing of QE and the confirmation of a more positive economic outlook in the latest FOMC minutes.”

Tremblay went on to say that “Beyond the short term, we remain positive on gold’s outlook as the fundamentals are still solid. These include high liquidity, low interest rates and sovereign debt concerns. An improving macroeconomic outlook and high risk appetite should see silver outperform gold for most of H2’12 and 2013 although silver, like gold, remains vulnerable to waves of liquidation. As a result, the gold/silver ratio should decline to the low 40s by H2’13.”

In light of the above, Tremblay maintained her 2012 and 2013 gold price targets of $1,850 and $2,225 per ounce, respectively.  As for silver, her 2012 estimate of $37.50 remained the same, while she lowered her 2013 target from $52.00 to $51.00 per ounce.

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