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Analysts Positive for Gold As Optimism Rises

Release Date: 
Tuesday, March 20, 2012

Gold prices moved lower as the U.S. dollar strengthened on market sentiment that the economy is improving and continued fears about Europe. The metal traded at $1651.70 per ounce at 7:03 a.m. Pacific Time on the New York Spot Market with silver at $32.49 per ounce.

Benchmark 10-year U.S. Treasury yields rose in the wake of government statistics showing the economy may be recovering more quickly than had been anticipated.

Although equity markets have moved higher recently, Jeremy Friesen, commodity strategist at Societe Generale in Hong Kong, warned that the momentum in U.S. recovery could falter, pressuring the Fed to keep real interest rates low to support growth. "Rising treasury yields are consistent with the very bullish outlook on U.S. economy, but we don't think that's on the cards yet," Friesen said.

BNP Paribas analyst Anne-Laure Tremblay said she was maintaining her price forecast for this year at $1,850.00/oz. "Beyond the short term, we remain positive on gold's outlook as the fundamentals are still solid. These include high liquidity, low interest rates and sovereign debt concerns," she said.

"We are still standing by our bullish call for the [gold] market," said RBS analyst Nikos Kavalis. "We think prices can, and will, go higher later in the year, so I would say at current prices, we would definitely be buyers."

(Source: "PRECIOUS-Gold edges down, positive US outlook dents demand," Reuters, March 20, 2012; "PRECIOUS-Gold falls as economic optimism helps dollar," Reuters, March 20, 2012)

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