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Analyst Survey Predicts Gold May Average $1,925 in 4Q 2013

Release Date: 
Tuesday, November 20, 2012

Gold prices were unchanged after settling at its highest price in a month yesterday. The precious metal was up a modest $0.10 at 6:44 a.m. Pacific Time on the New York Spot Market, trading at $1,733.00 per ounce. Spot silver was even at $33.21 per ounce. (Click here for the most current spot prices.)

Gold is expected to rise every quarter next year and may average $1,925 an ounce in the final three months, or approximately 11 percent more than the current price, according to the median estimates of 16 analysts polled by Bloomberg. Credit Suisse Group analyst Tom Kendall, the most accurate gold forecaster tracked by Bloomberg over the past two years, said gold may average $1,880 per ounce in the fourth quarter of next year while UniCredit SpA’s Jochen Hitzfeld, ranked second by Bloomberg, expects $1,950 per ounce. Analyst Dan Brebner at Deutsche Bank, the third most accurate forecaster, said gold may average $2,300 per ounce gold in the third quarter.

“We see gold as a hedge against the follies of politicians,” said Michael Mullaney, who helps manage $9.5 billion of assets at Fiduciary Trust in Boston. “It’s a good time to garner some protection in portfolios by having some real asset like gold.”

“It looks as though global monetary stimulus is likely to continue, particularly in the wake of growing fiscal austerity,” said Alan Gayle, senior strategist at RidgeWorth Capital Management in Richmond, Virginia, which oversees about $47 billion of assets. “That puts pressure on the monetary authorities to stimulate the economy and that will debase the currencies and put a bid under gold.”

"If the oil market starts to move considerably higher based on Middle East risks, inflationary pressures would grow, and so gold could be seen as a way to hedge against inflationary pressures," said Mr. Brebner at Deutsche Bank.

“Unless there is a clear agreement between the Democrats and Republicans on the solution to the so-called U.S. fiscal cliff, the short-term direction is bullish for gold,” said Chintan Karnani, chief analyst at Insignia Consultants. Karnani also noted that the escalation of the Palestinian conflict is the key reason for gold’s rise as it raises demand for safe haven assets like gold.

(Sources: “Soros Buying Gold as Record Prices Seen on Stimulus,” Bloomberg, November 20, 2012; “PRECIOUS-Gold steadies on hopes for U.S. fiscal deal,” Reuters, November 20, 2012; “Gold up nearly $20 to settle at highest in a month,” Marketwatch, November 19, 2012;)

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†This material has been prepared for private use. Although the information in this commentary has been obtained from sources believed to be reliable, Goldline does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice.

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