Merrill Lynch Strategist Says Gold Could Hit $2,500
Gold prices will rally again in 2012 to reach $2,000 to $2,500 per ounce because demand is still strong and the precious metal is still seen as a safe haven, according to Sabine Schels, a commodities strategist at Bank of America Merrill Lynch. Despite the correction in gold prices
in recent months [XAU= 1594.89 -3.86 (-0.24%)
, Schels said sustained investor demand would result in gold prices averaging $1,850 in 2012, up from $1,573 in 2011.
“We see no let up in investor interest. Exchange traded funds’ levels continue to hold up,” she said.
Schels said the negative outlook for sovereign debt , coupled with easy monetary conditions in the euro zone, the US and Japan, meant gold would retain its "safe haven" status, while still offering comparatively strong returns.
Gold will also benefit from a continued need for central banks in emerging markets to diversify their holdings, she said.
Schel’s view differs from some other market participants, who say the sell-off in the precious metal will continue.
Earlier last week, commodities trader and economist Dennis Gartman told CNBC he expected the precious metal to fall to $1,500 per ounce or lower, and has sold off his personal gold holdings. Meanwhile, trader Steve Cortes predicted an even steeper fall-off to $1,000.
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