August 22, 2011 / 8:43 PM / 8 years ago

Factbox: Banks race to raise gold price forecasts

(Reuters) - Gold prices hit a record high near $1,900 an ounce on Monday, boosted by hefty losses in stock markets in recent sessions and speculation that a sluggish U.S. recovery could lead to a further round of quantitative easing.

Spot prices are up by about a third this year and are on track for their biggest quarterly gain in at least 25 years. The rally has prompted a number of banks and trading houses to raise their gold price forecasts.

Below are recent price views for gold. Please note that dates given are those of the reports in which the forecasts appeared, which may differ from the dates on which they were made.


* SocGen raised its average gold price forecast to $1,950 an ounce for the fourth quarter of 2011, pushing its 2011 annual average to $1,660 an ounce.

* The bank also raised its 2012 forecasts to average $2,275 per ounce, and sees the metal trading around $2,500 an ounce in the fourth quarter of 2012.

* “A combination of continued highly accommodative monetary policy, anemic growth, and continuing sovereign debt problems will continue to push gold to new highs,” SocGen added.


* Citi lifted its 2011 gold price forecast to $1,590 an ounce from $1,440, and its 2012 price view to $1,650 from $1,325. In 2013 it sees gold averaging $1,500 an ounce versus a previous forecast of $1,225.

* “Increased global risk, (dollar) weakness, growing inflationary fears, the USA debt downgrade and continuing sovereign debt risks in Europe have increased investor appetite for gold,” the bank said in a report.

* “This has been supported by central banks reversing activities from being sellers for most of the past 15 years to net buyers more recently, and is supported by the Fed’s stated desire to keep interest rates at super-low levels in the medium term,” it added.


* National Australia Bank said that in quarterly average terms, it forecasts the gold price to be around $1,600 an ounce in December 2011.

* “Recent economic events should help to maintain the price of gold at an elevated level until uncertainty begins to dissipate and investor demand for gold unwinds,” it said.


* HSBC said gold could rally above $1,850 an ounce this year and average more than $1,700 an ounce for the remainder of 2011.

* “Gold is a widely traded, universally accepted hard asset and a proven safe haven instrument,” it said. “Investors have traditionally turned to it when faith in government policies - as reflected in a government’s credit rating, the value of its currency and demand for its bonds, and even in levels of social unrest - deteriorates.”

* The bank reiterated its decision on August 8 to lift its 2011 gold price forecast to $1,590 an ounce from $1,525, raise its price view for 2012 to $1,625 from $1,500, and increase its 2013 gold forecast to $1,550 from $1,450.


* Bank of America-Merrill Lynch said in a research note it was revising its 12-month gold target to $2,000 an ounce.

* “Physical gold is the ultimate collateral because it has no credit risk, so emerging market central banks have been diversifying their foreign exchange reserves into gold and other non-dollar, non-euro assets in recent quarters,” it said.

* “Looking ahead, the deterioration in credit quality in Europe and the U.S. coupled with an increased probability of QE3 means these pressures will continue,” it added.


* JPMorgan said rising expectations that the financial crisis would flare up once more following Standard & Poor’s downgrade of the United States’ credit rating last week had caused it to lift its price view on gold this year.

* “Before the downgrade, our view was that cash gold could average $1,800 per ounce by year end,” the bank said in a note. “This view will likely now prove to be too conservative: spot gold could drive to $2,500 per ounce or higher, albeit on very high volatility.”


* Goldman Sachs said it was raising its gold price forecasts to $1,645 an ounce, $1,730 an ounce, and $1,860 an ounce on a three, six, and 12-month horizon respectively.

* “With our U.S. economics team now lowering their outlook for U.S. economic growth to 1.7 percent in 2011 and 2.1 percent in 2012, we now expect real interest rates will remain lower for longer, and we are now raising our gold price forecasts,” it said.

* “The recent escalation of sovereign debt concerns suggests that the near-term risk to our new forecast is skewed to the upside, and we continue to recommend long trading positions in gold,” it added.


* UBS said it was lifting its one-month gold forecast to $1,725 from $1,575 previously, and its three-month price view to $1,850 from $1,600.

* “With U.S. growth strait-jacketed and as expectations for some form of Fed easing grow, the macro climate remains gold-supportive,” it said in a note on August 3. “There are still valid concerns about global growth, neither European nor U.S. debt issues have been comprehensively dealt with and European peripheral bond spreads reached record levels yesterday.”

* “From the potential for quantitative easing in the UK, to the reality that U.S. rate hikes are more than 12 months away, to continuing central bank diversification toward gold, there’s no shortage of positives in the months ahead.”

Compiled by Jan Harvey; Editing by Jason Neely

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