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.”

Comments

Post a Comment

Popular posts from this blog

Gold edges up on weaker dollar, dovish U.S. Fed policy bets

Image
 Gold edged higher on Monday, helped by a weaker dollar and expectations that the U.S. Federal Reserve will reiterate its dovish monetary policy stance this week. Spot gold was up by 0.1% at $1,943.58 per ounce. U.S. gold futures rose 0.1% to $1,950.10 per ounce. “Gold is firm on the basis that the Fed could adopt a further dovish message with respect to average inflation targeting,” said Michael Hewson, chief market analyst at CMC Markets UK. “If you want to have a policy of average inflation targeting, you’re going to have to go into detail as to how you are going to arrive at that particular outcome.” The dollar retreated on Mond ay, bolstering gold’s appeal for investors holding other currencies, ahead of the Fed’s policy decision due on Wednesday. “If inflation forecasts remain at 2% or below, this could offer gold a tailwind as the zero-yielding metal thrives in a low-interest rate environment,” said FXTM analyst Lukman Otunuga. Market participants are also wai...
Read more

For the gold price, two outcomes are possible.

Image
For the gold price, two outcomes are possible. First is a return to or near the April low ($1,277.40). Second is a drop to a lower low, $1,240 - $1,260. Yet a third possible outcome is that the June and December lows were not a double bottom and one further drop may come. I account that the least likely, and look for a low here by the end of the week, but I'm no more'n a nacheral born durnd fool from Tennessee, so what do I know?   You'd think that an institution charged with promoting the gold industry would produce reports that at least cast the best light on gold's prospects. You'd think wrong, if you're thinking about the World Gold Council. They've been negative on gold for, oh, the last 14 years or so. Today they issued a report that contained a nugget about Chinese business using physical gold as collateral for bank credit ($40 bn worth) but they managed to tease a gloomy forecast even out of this inventive monetary use. That and bad ...
Read more

The price of gold advanced as high as $1,603.40 per ounc

Image
The gold price broke out to a new all-time high above $1,600 per ounce Monday morning, rising for the eleventh consecutive trading session. The price of gold advanced as high as $1,603.40 per ounce before backing off to trade just the $1,600 level. The yellow metal gained on the back of a surge in borrowing costs for Italy, the latest European nation to see its bond market come under heavy selling pressure. The lack of a deal to raise the $14.3 trillion debt ceiling also helped boost gold prices. The eleven-day rise in the gold price is the longest winning streak since January of 1980. The gold price delivered another noteworthy performance last week, climbing 3.2% on its way to a series of fresh record highs. With Monday’s advance, the gold price extended its monthly and year-to-date gains to 6.6% and 12.5%, respectively. Last week’s two-day Congressional testimony by Chairman Ben Bernanke on the economy and monetary policy revealed that the Fed remains open to the...
Read more