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Deutsche Bank Raises 2013 Gold and Silver Targets

Release Date: 
Thursday, October 25, 2012

The price of gold moved higher today on a weaker dollar and the Federal Reserve’s pledge to continue its monetary easing program low interest rates to support the economy.  Gold was $13.00 higher at 7:48 a.m. Pacific Time on the New York Spot Market, trading at $1,715.50 per ounce.  Spot silver was $.35 higher, trading at $32.18 per ounce.  (Click here for the most current spot prices.)

Deutsche Bank raised its 2013 price targets for gold and silver, citing support from stimulus measures by central banks including the Fed.  Gold may average $2,113 per ounce in 2013, and exceed $2,200 per ounce, while silver may average $44 per ounce, the bank said.  

“A major support for precious metal prices are the recent moves by central banks to expand their balance sheet. Since gold is often sought as a hedge against currency weakness and inflation at times of loose monetary policy, such moves tend to boost its appeal to investors,” said Deutsche Bank analysts.

"We believe central bank action to stimulate growth, avoid deflation and reduce systemic risk is unambiguously bullish for the precious metals sector and specifically gold," the bank added.

"While we have targeted gold prices moving above $2,000 per ounce since the beginning of 2011, we believe the Fed's open-ended program of QE announced last month increases our confidence that a surge in the gold price above this level is only a matter of time.”

HSBC analysts James Steel and Howard Wen also commented on Fed policy.  “A highly accommodative stance by the Federal Reserve ... is positive for gold prices in the medium term…,However, we continue to see some modest near-term pressure on gold.”

Sterne Agee precious metals and mining analyst Michael Dudas believes investors may have a buying opportunity with the recent price consolidation.  “I think there will be some support in the physical market around $1,700.  We’ll see some buying out of India.  We think that central banks will continue to have a bid under this marketplace, and as long as the Fed will keep real interest rates low forever, it seems, I think gold it going to continue to get a bid in the marketplace.  I think this pullback, from a fundamental basis to me, is more of a buying opportunity than a sell…We’ve got a price target next year of $2,000.”

(Sources: “Gold rises on Fed policy, dollar weakness,” Marketwatch, October 25, 2012; Reuters, October 24, 2012 “Top Analyst: Buy the Dip, Gold to $2,000,” CNBC, October 23, 2012; “Deutsche Bank still bullish on Gold; raises 2013 Gold, Silver forecasts,” Commodity Online, October 23, 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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