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Analysts Weigh Potential for Price Rise in Gold

Release Date: 
Monday, November 26, 2012

Gold was slightly lower although still trading near five-week highs as European finance ministers met for a third time this month regarding aid to Greece. Gold prices were $1.10 lower at 7:54 a.m. Pacific Time on the New York Spot Market, trading at $1,751.80 per ounce.  Spot silver was $0.03 higher at $34.26 per ounce.  (Click here for the most current spot prices.)

Eurozone finance ministers and the International Monetary Fund meet today to discuss whether its Greek aid package should include loan forgiveness.  Marex Spectron said in a daily market report, "if they cannot resolve this, the euro may well be sold, which in turn will probably drag gold lower with it.” 

“The uncertainty surrounding the euro group meeting on Greece has impacted the euro-dollar and in turn gold,” said UBS analyst Edel Tully.  “We overall expect some eagerness to buy dips in this cautiously optimistic atmosphere.”

Christin Tuxen, analyst with Danske Bank, said some investors had booked profits in gold after it rallied higher on Friday.  "There is some profit taking in gold today. It is a small move lower today compared to the rise on Friday," she said.

Gold’s gain last week above $1,748.95 in London “suggests there is potential for more upside in the near term,” according to UBS. There’s resistance at about $1,775 and the October high at $1,796.05, the bank said.

"It is not clear that gold has made a decisive breakout - we'd like to see prices above $1,760 to confirm the move," ANZ said in a report.  The bank reiterated its year-end gold price forecast of $1,780 per ounce.

OCBC Bank analyst Barnabas Gan said the bank has a 2012 year-end gold price forecast of $1,800 per ounce.

Tom Price, Global Commodity Analyst at UBS, said that he has a price target of $1,900 per ounce for gold in mid-2013.

(Sources:  “Gold Trades Near Five-Week High as EU Ministers Debate Greece,” Bloomberg, November 26, 2012; PRECIOUS-Gold dips from one-month high, focus on Greek debt,” Reuters, November 26, 2012; “PRECIOUS-Gold comes off 1-month high despite firmer euro,” Reuters, November 26, 2012; “PRECIOUS METALS: Gold Rangebound in Asia; Euro-Zone Meeting Eyed,” Wall Street Journal, November 26, 2012; “PRECIOUS METALS: Gold Flat in Asia; Investors Cautious on Greek Debt Impasse,” Wall Street Journal, November 23, 2012’ “Gold Seen Hitting $1,900 Mid-2013,” CNBC, November 20, 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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