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Citigroup Forecast Bullish on Gold

Release Date: 
Monday, April 16, 2012

Gold moved lower on Monday as the euro fell and the dollar gained on concerns over an upcoming Spanish government bond auction. The auction is considered be a bellwether of investor sentiment as the nation wrestles with its debt crisis. Gold traded at $1652.70 per ounce at 6:07 AM Pacific Time on the New York Spot Market with silver at $311.67 per ounce.

Citigroup said today that its commodity price forecasts between 2012 and 2014 remain bullish on gold. "The culmination of changes has resulted in a preference for base and precious metals over the bulk commodities. Within these various commodities the conviction calls are in palladium, nickel, and gold on the bullish side," the bank said in a research note. The bank projected that gold will rise 6.8% to $1,835 per troy ounce in 2013 from $1,718 per ounce in 2012. The 2012 estimate was revised up 0.5% from the bank's previous forecast.

John Hathaway, manager of the $2 billion Tocqueville Gold Fund, said, "The prospects for further [monetary] stimulus have been terrific all along. It's a matter of when."

"Governments are going to continue to run large deficits and to fund it they are going to print...that's great for gold," said Charles Oliver, a portfolio manager with Sprott Asset Management in Toronto. He expects gold will reach $2,000 per ounce with a "very strong chance" of gaining that level this year.

 (Source: "PRECIOUS-Gold falls 1 pct as worries over Spain intensify," Reuters, April 16, 2012; "Fund Manager to Lose Hair After Betting on $2,000 Bullion," Bloomberg, April 16, 2012; "Bullion's Bulls Pulling Back," Wall Street Journal, April 16, 2012; "Citi bull on nickel, gold, palladium; silver bear," MarketWatch, April 16, 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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