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Nomura Raises 2012 Gold Forecast to $2,000/ounce

Release Date: 
Thursday, November 10, 2011

Japan's Nomura Group raised its forecast for gold prices by more than 10% to $2,000 per ounce by the end of 2012. Among the reasons for the increase were the low-interest rates in the U.S., easing of monetary policy by the European Central Bank and the Bank of England's second round of quantitative, making the precious metal attractive to investors as an inflation hedge.

In Europe, gold edged higher on a weaker dollar versus the euro after better than expected U.S. job data. New claims for unemployment benefits declined for a second straight week.

Markets continue to respond to a potential disorderly bankruptcy in Greece and the debt crisis in Italy. "Broader trading is jittery but gold is more supported," said Andrey Kryuchenkov, an analyst with VTB Capital. "If the dollar weakens and the broader market is more risk-friendly gold will track it. If uncertainty remains, gold will be supported by safe haven buying."

Mario Monti, a former European Commissioner, has emerged as the favored candidate to replace outgoing Italian Prime Minister Silvio Berlusconi and form a new government. The news helped reduced the risk of a run on Italian bonds and boosted investor confidence while lifting gold prices.

(Sources: "Nomura raises 2012 gold forecast to $2,000/ounce," MarketWatch, November 10, 2011; "PRECIOUS-Gold up on weaker dollar, Italy weighs," Reuters, November 10, 2011; "Gold Drops for Second Day as Worsening European Crisis Fuels Dollar Demand," Bloomberg, November 10, 2011; "Gold Trims Losses on Italy New Government Hopes," CNBC, November 10, 2011)

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