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Morgan Stanley Says Gold is Top Pick for 2013

Release Date: 
Thursday, December 6, 2012

The price of gold moved higher Thursday, trading near the $1,700 per ounce mark.  Gold was $4.40 higher at 7:52 a.m. Pacific Time on the New York Spot Market, trading at $1,699.70 per ounce.  Spot silver was $0.22 higher at $33.23 per ounce.  (Click here for the most current spot prices.)

Morgan Stanley reiterated its call for gold to be the top commodity for 2013 on investor demand and central bank buying, with a weaker dollar supporting the precious metal.  Gold may average $1,853 per ounce in 2013, while silver may average $35 per ounce, Morgan Stanley said.  Silver should trade higher, helped by low real interest rates, official sector buying and geopolitical uncertainty.

Deutsche Bank metals research head Daniel Brebner said "further central bank balance sheet expansion" likely next year may push gold toward $2,000 per ounce. 

David Joy, chief market strategist at Ameriprise Financial, agrees gold may move higher in 2013 on the Fed expanding its balance sheet, further devaluing the dollar.  The company places gold among its winning asset class picks for 2013.

Li Ning, an analyst at Shanghai CIFCO Futures, expects gold may revisit the $1,800 per ounce in the first half of 2013.

BNP said its 2013 average gold price forecast is $1,865 per ounce.

Physical demand for gold has improved at the current price level.  "Improving physical demand means that we are probably getting closer to the bottom of gold prices for now," said Yuichi Ikemizu, branch manager for Standard Bank in Tokyo, adding that $1,670 would be a near-term support level.

Demand in India was strong as prices fell to their lowest in a month.  "Buying is on, as people feel prices are good," said Haresh Acharya, head of the bullion desk at Gujarat-based Parker Bullion. "Wedding demand is expected to continue for another couple of months."

(Sources:  “Morgan Stanley Backs Gold, Corn, Beans as Best Picks in 2013,” Bloomberg, December 6, 2012; “Gold Declines for Third Day Toward One-Month Low as Dollar Gains,” Bloomberg, December 6, 2012; “PRECIOUS-Gold inches down; physical buyers pick bargains,” Reuters, December 6, 2012; “PRECIOUS-Gold steadies near one-month low after ECB decision,” Reuters, December 6, 2012; “PRECIOUS METALS: Comex Gold Slips Again, Holds Below $1,700,” Wall Street Journal, December 6, 2012; “Gold prices to be range-bound in '12-'13: Deutsche,” Marketwatch, December 6, 2012; “Ameriprise: Big-Caps, Growth & Gold Will Win in 2013,” The Street, December 5, 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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