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UBS 2012 Forecast: Gold May Average $2075/Ounce

Release Date: 
Tuesday, December 6, 2011

Tom Price, Global Commodity Analyst at UBS AG, provided his probable scenario for gold prices in 2012 based upon his the macro outlook for the global economy. "We are ‘screaming bulls' at UBS," he said. "We've got $2075 per ounce for 2012, and that's based almost entirely on an uncertain world and the fact that the European economy is struggling at the moment and that's going to persist." He added, "It's an annual average, but the first couple of quarters are critical…Our view is that $1700 is a nice low to come on at."

Gold was lower on Tuesday on fears over Europe's debt crisis. Standard & Poor's warned it may downgrade 15 euro zone nations, including France and Germany, if no credible plan emerges to tackle the crisis. France and Germany agreed upon a plan yesterday to create stronger ties in the euro zone and mandate enforcement of fiscal discipline among euro-zone nations.

"The market is currently being driven by politics and particularly by development in the euro zone. I expect there is now some caution with the meeting on Friday and the ECB meeting on Thursday," Peter Fertig, a consultant at Quantitative Commodity Research, said.

"Apparently, $1,750 is a tough resistance to break. The market is in need of strong fundamental impetus to break above this mark. Thursday could provide such an impetus as the ECB will meet for its policy meeting," Credit Suisse analysts said in a note.

(Sources: "PRECIOUS-Gold slips on Europe debt fears, downgrade warning," Reuters, December 6, 2011, 2011; "Gold to Reach $2075 in 2012: Analyst," CNBC, December 5, 2011)

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