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Analysts Are Increasingly Bullish on Gold

Release Date: 
Thursday, October 11, 2012

Gold moved higher as the euro recovered against the dollar, despite news that Standard & Poor’s downgraded Spain’s debt rating to one level above speculative status.  Gold was $8.70 higher at 7:24 a.m. Pacific Time on the New York Spot Market, trading at $1,772.30 per ounce.  Spot silver was $.23 higher, trading at $34.31 per ounce.  (Click here for the most current spot prices.)

The latest Reuters poll shows that precious metals analysts have become more bullish for the prospects for gold and silver than they were 3 months ago.  It’s a notable result considering gold’s recent strong performance.

Gold has risen by approximately 13 percent in 2012 to date, making it one of the strongest-performing commodities this year. Gold is roughly $215 higher in 2012, with approximately $165 in gains in the last two months following the Fed’s announcement of a third round of quantitative easing.

HSBC analyst James Steel said the underlying bullish case for gold is intact, given the prospect of loose monetary policy for years to come, ongoing central bank purchases of bullion and demand from major gold consumers such as China.

David Beahm, VP of Marketing and Economic Research at Blanchard & Co., said, "Gold is reasserting itself as a strong safe haven during the current period of risk and uncertainty. The European debt crisis remains a major issue in the global economic marketplace, and other major indicators in the U.S. and abroad continue to illustrate just how feeble the economy remains. Many investors have moved into gold to protect and grow their wealth, and we foresee global investment demand for gold to grow even further than the 900 percent increase it has seen since 2007."

David Jollie, strategic analyst at Mitsui Precious Metals, said, "gold still remains a virtual currency in the eyes of many people and can act as a form of last ditch insurance. Given the strains that currently exist in the global economic system, we expect gold to continue to benefit from heightened risk and increased perceptions of risk."

(Sources:  “Precious metals analysts more bullish on gold and silver,” Mineweb, October 11, 2012; “Gold gains after four-day drop; watching euro,” Reuters, October 11, 2012; “Gold futures pare gains after jobless data,” Marketwatch, October 11, 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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