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LBMA Industry Survey Says Gold May Average $1,753 This Year

Release Date: 
Tuesday, January 15, 2013

The price of gold rose against a weaker dollar after a European Central Bank (ECB) economist stated the worst of the Eurozone debt crisis was likely over.  Gold was $5.10 higher at 7:38 a.m. Pacific Time on the New York Spot Market, trading at $1,668.80 per ounce.  Spot silver was $0.48 higher at $31.02 per ounce.  (Click here for the most current spot prices.)

A ECB economist was stated there is a "good chance" the worst of the euro zone's debt crisis was over.  The Euro later rose to a 10 month high against the dollar..

Analysts and traders surveyed by the London Bullion Market Association for its annual survey expect that the price of gold may average $1,753 per ounce this year, a five percent rise from the 2012 average.  Eleven of the 23 participants surveyed said that they thought gold this year would rise above its record high of nearly $1,920 a troy ounce.

David Lennox, resources analyst at Fat Prophets, forecasted that gold may reach $2,300 to $2,500 per ounce in 2013. “We continue to support a very strong gold price.  You look at the U.S. dollar, and we think through 2013 we can’t see any factors that will be inclined to want to drive [the dollar] higher.  The debt ceiling will come into play there…the watering down of the current fiscal cliff that we’ve just gone through will play into that as well.  Also, we have yet to see what programs are really going to be cut when the U.S. government does finally get to the scissors for its budget.”

“To us, that all points to a weak U.S. dollar, and that should, we think, support gold,” Mr. Lennox continued.  “We also believe that foreign governments will continue to buy gold as a replacement for other types of assets in their reserves.  And we think that investors will continue to probably retain their holdings…So when we add those together, we think that gold has quite a good future.  Hence, our very bullish ranges for 2013.”

With higher-than-expected jobless claims in the U.S. and the focus remaining fixed on employment generation, the case for continuing accommodative monetary policy remains strong, Deutsche Bank said. Analyst Xiao Fu Gold said that gold has upside potential, but noted a $1,700 per ounce resistance level for the metal.

(Sources: “Gold Edges Higher in Asia, Helped by Strong Euro; Precious Metals Mixed,” Wall Street Journal, January 14, 2013; “Comex Gold Gains on Rise in Euro Ahead of Bernanke Speech,” Wall Street Journal, January 14, 2013; “Gold Settles Down 1%,” Wall Street Journal, January 11, 2013; “Bullish on Gold in 2013,” CNBC, January 8, 2013)

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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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