LONDON Jan 21 Morgan Stanley and UBS raised
their gold price forecasts on Wednesday, citing safe-haven
demand for bullion amid turmoil in the banking sector and a
gloomy outlook for the economy.
U.S. bank Morgan Stanley (MS.N) raised its 2009 gold price
forecast to $900 an ounce from $750 previously, and its 2010
price view to $1,000 from $825.
"Gold prices are likely to be higher by year-end in the
context of aggressive monetary stimulus and falling confidence
in paper money," the bank said.
It added, however, that deflationary worries and a strong
dollar could weigh on prices early in the year.
UBS UBSN.VX said it now sees gold at $900 an ounce in one
month, against a previous forecast for $800, and at $850 an
ounce in three months, also against $800.
"Our client flows suggest that the developments in the
banking sector have truly spooked investors again, with strong
demand for coins and small investment bars seen since the start
of the week," said UBS strategist John Reade in a note.
"The New-York listed SPDR gold ETF hit another new high...
and most significantly, gold made strong gains yesterday despite
a large sell-off in EUR/USD."
"The key to where gold heads from here is in the concerns
about the banking sector," he added.
Spot gold XAU= was quoted at $857.20/859.20 an ounce at
1106 GMT. On Tuesday it rose 2.5 percent despite weakness in its
main driver, the euro-dollar exchange rate, as risk aversion
(Reporting by Jan Harvey; Editing by Peter Blackburn)