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B of A Strategist Says Gold May Reach $5,000

Release Date: 
Thursday, May 24, 2012

Gold rose on Thursday as the dollar fell versus the euro on disappointing U.S. manufacturing and unemployment news. Gold was $10.00 higher as of 8:02 a.m. Pacific Time on the New York Spot Market, trading at $1,573.30 per ounce. Spot silver was $0.57, trading at $28.51 per ounce. (Click here for the most current spot prices.)

Technical strategist MacNeil Curry from Bank of America Merrill Lynch published a research note titled Time To Buy Gold that contained bullish price forecasts. "Minimum upside targets are seen to the 6-month range highs at $1,789/$1,803, with potential to the Sep'11 highs at $1,921 and a resumption of the secular bull trend that ultimately targets a price of $3,000 to $5,000 an ounce," he said.

Data from the International Monetary Fund showed the Philippines increased its gold holdings by 32.13 tons in March, the largest amount in more than three years. Turkey increased its gold reserves by 29.7 tons while Mexico, Ukraine and Kazakhstan also bought gold in April.

"We regard the central banks as a stabilizing element on the gold market and anticipate increasing buying of gold if its price should fall towards the $1,500 a troy ounce mark," Commerzbank said in a note. Frank McGhee, the head dealer at Integrated Brokerage Services LLC, said "...dollar weakness and reports about central bank buying is helping gold."

David Rosenberg, chief economist and strategist at Gluskin Sheff & Associates Inc., said, "I would say right now after this huge correction gold is hugely oversold...My sense is that the secular bull market in gold is intact. I don't think that it's over, notwithstanding this correction, any more than the correction in the U.S. equity market in 1987 was over...we had 13 years left in the secular bull market in stocks after October 1987...we're going to get more quantitative easing, we're going to get more money printing by the global central banks, and one of the most important determinants over time...for gold is the level of real short term interest rates, which are negative right now and I think are going to remain negative for an extended period of time. I think that gold is going to remain a refuge."

(Source: "PRECIOUS-Gold prices rise 1 percent as dollar retreats," Reuters, May 24, 2012; "Rosenberg Says Gold Bull Market Intact," Bloomberg, May 24, 2012; "Gold Gains First Time In Four Days As Central Banks Buy," Bloomberg, May 24, 2012; "Manufacturing, Jobs Mostly Flat," The Wall Street Journal, May 24, 2012; "A Different BofA Technical Analyst Sees Gold Going To $5,000," Business Insider, May 22, 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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