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Goldman Says Gold May Average $1810/oz. in 2012

Release Date: 
Wednesday, December 28, 2011

The gold market was steady in thin year-end trading on Wednesday, with gold trading at $1593.60 per ounce at 6:55 a.m. Pacific Time on the New York Spot Market and silver at $28.69 per ounce.

Goldman Sachs expects that gold may average $1,810 per ounce in 2012 and peak at more than $1,900 per ounce. In its year-end forecast, the bank said gold prices may stay strong due to U.S. real interest rates remaining low, continued demand for physical gold from central banks and institutional investors, further concerns over paper currencies and a low risk appetite due to the euro-zone debt crisis and a sluggish recovery. Against this backdrop, Goldman expects that gold's appeal as a lower-risk asset class is likely to support demand in 2012.

"Our economists' central thesis is that US real rates will remain low given limited appetite to slow the fragile US recovery or hurt the all-important job growth in an election year. Inflation from non-domestic sources (e.g. imported oil) will also lower US real rates," the bank said.

(Sources: "Gold Left Some Investors in the Dust," Wall Street Journal, December 28; "Goldman Sachs expects gold bull run to continue into 2012," Proactive Investors, December 23, 2011; "PRECIOUS-Gold inches down as growth concerns weigh," Reuters, December 28)

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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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