Tuesday, March 22, 2011

Goldman Sachs Call For $1,480 Gold In Next Three Months

Essentially, the driver will be U.S. inflation outstripping any rate hikes.
Gold price is expected to show a rally in the next three months and hit a record of $1,480 an ounce on the back of declining U.S. real interest rates and other issues plaguing the world today, forecasts the U.S. investment bank Goldman Sachs Group Inc.

Moreover, the bank in a report on Friday said that the gold price may reach peak levels in 2012, as owing to US economy recovery leading to rise in interest rates. Goldman Sachs predicts six-month gold view at $1,565 an ounce, and in 12-months the forecast are pegged at $1,690 an ounce.
The firm is convinced that the Federal Reserve bigwigs see negative interest rates as being good for the economy, which will impel the FOMC to stay dovish.

To be honest, that's the driver I'm looking for. Gold's been talked about a far bit in the mainstream press, mainly as a portfolio-hedge tool, but there hasn't been a lot of demand for the metal outside of the usual circles. Seeing U.S. inflation ramping up could rev up gold into its blow-off top, as people who've been exposed to it but not bought get the gold fever. Despite the metal's new roles as portfolio insurer, inflation is the fuel that gets ordinary people buying on a sustained basis. Look at India and China, where inflation is a lot higher than in North America and Europe.

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