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Deutsche Bank: Gold May Rise to $2,000 Per Ounce

Release Date: 
Tuesday, May 10, 2011

Gold prices could surge another 30 percent by January as investors seek to protect themselves from "economic uncertainty," according to commodity traders at Deutsche Bank AG.

"I'm bullish on gold despite its current levels," said Hal Lehr, Deutsche Bank's managing director for cross-commodity trading. "It could reach $2,000 dollar an ounce in the next eight months."

Gold prices were increasing towards a third daily rise on Tuesday after a falling dollar helped prices for the precious metal, while concern about Greece's debt crisis also lent support. Investors are watching China's inflation data, due Wednesday, which may provide insight on whether China's central bank will tighten monetary policy further after a string of rate increases.

Gold priced in euros rose by 0.3 percent, an indication of investor fears over Greek debt. Euro-denominated gold rose by nearly 40 percent last year, when investors fled euro-priced assets as the region's debt crisis unfolded. "Gold prices would profit from any escalation in concerns over Greece's debt sustainability," said UBS analyst Edel Tully.  "In this climate it is also worth paying attention to the euro price of gold," she said.

The price of gold rose for six consecutive weeks through April 29 in part due to gold's role as a hedge against inflation for investors and governments. Central banks in China, India and the European Union, among others, have increased interest rates in recent weeks as policymakers have sought to control consumer prices with tighter monetary policy.

(Sources:  "Deutsche Bank Sees Gold Surging as High as $2,000 as Soros Pares His Bets," Bloomberg, May 10, 2011 "Gold Rises Above $1,509 as Dollar Retreats," CNBC, May 10, 2011; "PRECIOUS-Gold inches lower after oil margin hike; Greece aids," Reuters, May 10, 2011)

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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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