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Deutsche Bank Raises Gold Price Target

Release Date: 
Tuesday, October 2, 2012

Gold prices rose on a weaker dollar as the euro recovered from three-week lows and Fed Chair Bernanke pledged that monetary stimulus will continue even when the economic recovery begins to gain strength. Yesterday, Chicago Fed President Charles Evans said the Fed’s current quantitative easing program would last through 2013 to achieve improvement in the labor market. Gold was $2.60 higher at 7:33 a.m. Pacific Time on the New York Spot Market, trading at $1,778.80 per ounce. Spot silver was $.05 higher, trading at $34.80 per ounce. (Click here for the most current spot prices.)

Deutsche Bank raised its outlook for gold and silver prices in 2013 and 2014, saying gold may rise to $2,113 per ounce.  The bank said the price of gold could exceed $2,200 per ounce during 2013. Deutsche Bank also increased its 2013 outlook on silver, saying it may rise to $44 per ounce. "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," said Michael Lewis, research analyst at Deutsche Bank.

"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," he added.

UBS strategist Edel Tully stated "Overnight the mood has been quiet, but it feels just a matter of time before $1,800 breaks..."  ANZ analysts agreed, writing that gold is set to challenge resistance at $1,800 per ounce “[W]e retain our longer-term bullish view and would be buyers on dips."

(Sources: “Deutsche Bank lifts 2013, 2014 gold-price outlook,” MarketWatch, October 2, 2012; “Gold Is Seen Advancing as Bernanke Renews Stimulus Pledge,” Bloomberg, October 2, 2012; “PRECIOUS METALS: Gold Slightly Higher in Asia; Central Bank Easing Supports,” Wall Street Journal, October 2, 2012; “PRECIOUS-Gold builds on gains as euro edges higher,” Reuters, October 2, 2012; “PRECIOUS-Gold inches up as more cbank action eyed,” Reuters, October 2, 2012; “Fed's Evans see QE3 lasting until through 2013,” MarketWatch, October 1, 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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