Average gold price targets were $1,635 in 2011, $2,080 in 2012, and $2,200 in 2013

The gold price slid back below $1,670 per ounce Friday morning after U.S. weekly jobless claims came in modestly ahead of expectations. Silver retreated alongside the gold price, by $0.53, or 1.6%, to $32.08 per ounce. In the currency markets, the U.S. Dollar Index advanced 0.2% to 77.20, while the euro fell 0.4% to 1.3731 against the greenback.

“After trading sideways in June, gold rallied sharply through July and August,” strategists led by Anne-Laure Tremblay wrote. ”The increase was largely due to safe haven demand, triggered by doubts about whether the US would raise its debt ceiling. S&P’s downgrade of US debt and heightened sovereign issues in the Eurozone further increased risk aversion.”

Tremblay went on to note that “On 6 September, gold reached a peak of US$1,920/oz. However, sentiment soon reversed, and the price subsequently lost 20%, briefly touching US$1,535/oz on 26 September. It has since recovered to US$1,670/oz. Just as in October 2008, the recent drop appeared to reflect sales of gold offsetting losses in other asset classes triggered by extreme risk aversion.”

BNP subsequently stated that “We have revised our gold price forecasts. We now expect the price to average US$1,730/oz in Q4’11 before moving higher to US$1,950/oz in 2012 and US$2,125/oz in 2013.”

The firm’s previous average gold price targets were $1,635 in 2011, $2,080 in 2012, and $2,200 in 2013.

“Our main assumptions are unchanged. We see the gold price peaking in 2013, as the market starts to anticipate monetary tightening in the US, but do not expect a sharp fall thereafter. In the short term, a further correction is possible but this is not our central scenario. The main downside risk may lie with another round of extreme risk aversion, which could spark broad-based liquidation, as in September.”

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