The rebound in Gold was not accompanied by weakness in the U.S. dollar

Gold rebounded Thursday from earlier losses as the broader financial markets returned to positive territory in afternoon trading. COMEX gold futures fell below $1,600 per ounce this morning but later climbed toward $1,625, while silver bounced back from $28.69 to trade higher by 1.0% at $29.37 per ounce.

The rebound in Gold was not accompanied by weakness in the U.S. dollar, however, as the greenback maintained the large majority of its gains against a composite of foreign currencies. The euro remained particularly weak against the dollar, as it fell 1.2% to 1.2791.

While Macquarie discussed several near-term headwinds for the sector, it reiterated its longer-term bullish outlook for the gold price and the shares of gold producers. The firm’s favorable stance was based in large part on the expectation that negative real interest rates will remain in place for the foreseeable future. Additionally, Macquarie noted that the firm’s precious metals strategist, Stephen Harris, is forecasting a 2012 average gold price of $2,006 per ounce.

“Gold prices have been driven by the outlook for US real short-term rates,” Macquarie wrote in a report to clients. “Gold has historically gained nearly 25% when real US rates have been below zero. With policy rates at zero and substantial slack remaining in the US economy…real US rates are likely to remain negative for the next several years. Market conviction in that view may increase in early 2012 if the Fed moves, as we expect, to tie future rate policy directly to an unemployment rate target.”