GOLD SILVER PRICE NEWS ~ DUBAI - Gold is forecast to trade at $1,650 per troy ounce by the end of June 2012 on the back of sustained investor and central-bank demand amid sigs of growing jewellery off-take by China and India, precious metal analysts said.
Bank Sarasin in its latest analysis said in the short- to medium-term, global investor and central-bank demand would support gold prices, underpinned by Asian demand for jewellery.
Notwithstanding the bullish outlook for gold, Bank Sarasin said it no longer recommends long-term gold exposure and advises investors to watch for sustained interest rate increases.
The Swiss bank expects gold to trade at $1,575 by end-third quarter 2011 and $1,650 by end-second quarter 2012.
In its “Commodity Strategy” report, the bank said in the long-term, investors are likely to unwind gold positions in favour of higher yielding assets. Rising production could also pose price risks, it cautions.
“With the European debt crisis showing no signs of abating, and on-going concerns about the US government’s sovereign credit rating, gold prices have continued to rise driven by investor demand.
Slowing global economic growth will give gold additional support, as any rate hike, in particular in the USA, seems further in the future, pushing down real yields. At the same time, rising inflation in Europe and the US has raised the spectre of stagflation, again encouraging gold purchases,” the bank said.
Central banks, too, have become net buyers of gold, and Bank Sarasin expects this trend to continue. In contrast, Rolf W. Schneebeli, analysts at Gold Services AG, said, “long-term gold is and remains a buy.”
He said since gold price is driven by weak US dollar, a recovery of the greenback would drive up its price in other currencies.
On the outlook for the yellow metal, Schneebeli said, “it remains a buy to protect the investor against inflation.”
In the short term, it seems likely that the price in dollars will be stable to slightly up given the situation about the US budget deficit and money supply developments. “The dollar seems to be massively oversold and as we would anticipate a short term correction of the US Dollar, the gold price in other currencies has even more potential,” said Schneebeli Read More
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