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Bank of America Says Gold May Reach $2500/oz in 2012

Release Date: 
Tuesday, December 20, 2011

Gold prices were higher as the euro gained against the dollar today. Europe's finance ministers promised an additional 150 billion euros to the International Monetary Fund. The euro was also higher on increased economic confidence in Germany. Gold traded at $1612.00 per ounce at 6:07 a.m. Pacific Time on the New York Spot Market and silver was trading at $29.38 per ounce.

Gold prices could rally in 2012 to reach $2,000 to $2,500 per ounce on strong demand and investor interest in the metal as a safe haven asset, said Sabine Schels, a commodities strategist at Bank of America Merrill Lynch. "We see no let up in investor interest," she commented, adding that central banks in emerging markets also have an ongoing need to diversify their holdings by adding gold to reserves.

The negative outlook for sovereign debt and easy monetary policy in the euro zone, the U.S. and Japan can help gold would retain its "safe haven" asset status while still offering comparatively strong returns, Schels said. "All the bull-run dynamics are still in place," noted VM Group analyst Carl Firman.

(Sources: Gold Could Hit $2,500 Next Year: Strategist," CNBC, December 19, 2011; "Gold Below $1,600 May Signal a ‘Buy,' Dicker Says," CNBC, December 19, 2011; "PRECIOUS-Gold rises as the euro rebounds, but gains fragile," Reuters, December 20, 2011; "Gold Climbs as Euro Advances on IMF Pledge, German Business Confidence," Bloomberg, December 20, 2011)

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