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LBMA Industry Survey: Gold to Go Higher in 2012

Release Date: 
Monday, January 9, 2012

The price of gold was slightly higher today on the New York Spot Market, with gold at $1621.70 per ounce at 6:16 a.m. Pacific Time and silver at $29.29 per ounce. The dollar fell ahead of a meeting between France and Germany on ways to increase growth and improve fiscal coordination in the euro zone.

In the 2012 Forecast survey by the London Bullion Market Association, members expect gold prices to average $1,766/oz in 2012, with the highest gold forecast for 2012 coming in at $2055/oz. The members were generally bullish about other precious metals and predicted silver to rise as much as 17.3%.   

Trading was cautious in Europe as investors closely watched the meeting between German Chancellor Angela Merkel and French President Nicolas Sarkozy. "It's hard to point to any negative factors for gold," said Ole Hansen, a senior analyst at Saxo Bank. "...The dollar could be positioned for a bit of weakening -- euro short positioning rose to another record last week," Hansen said. "That should be supportive (for gold)."

"The current global macroeconomic environment is very conducive for higher gold prices,"said Sundeep Sikka, CEO of Reliance Capital Asset Management Ltd. in Mumbai. "The fundamental outlook for gold remains extremely bullish."

Bank of America/Merrill Lynch sees gold prices averaging $1,850 an ounce in 2012 with a high of $2,000 driven mainly by their expectation of more quantitative easing from the Federal Reserve and European Central Bank. "We expect gold prices to rise by 16%, or $275, over the next 12 months," said the report.

(Sources:  "PRECIOUS-Gold recovers from lows as dollar retreats," Reuters, January 9, 2012; "Gold Seen Extending Best Rally Since 1920 on Europe Crisis, Reliance Says," Bloomberg, January 9, 2012; "LBMA Forecast 2012 Predicts Price of $1,766 for Gold," LBMA Website, January 6, 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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