Survey Says Gold Will Hit $2,000 Per Oz. in 2012

Gold prices are likely to rally towards the $2,000 per ounce mark in late 2012 driven by ‎resurgence in investment demand as economic challenges continue. ‎

GFMS‎“We could easily see last September’s record high being taken out, and a push on ‎towards $2,000 is definitely on the cards before the year is out, although a clear breach ‎of that mark is arguably a more likely event for the first half of next year,” said Philip ‎Klapwijk, the head of metal analytics at Thomson Reuters GFMS, in the group’s Gold Survey ‎‎2012.‎

However, the report cautioned that gold will likely depreciate in the short term as the ‎euro-zone crisis seems to have abated while expectations have lowered that the U.S. ‎Federal Reserve will initiate another round of quantities easing (QE3).‎

Gold was trading at $1,656.90 an ounce on Wednesday, which is 14 percent below the ‎record high of $1,922.20 an ounce set in September 2011. Klapwijk said the yellow metal ‎may still fall below $1,550 in the next two months before the trend reverses in the second ‎half of the year.‎

The report suggested that the turnaround would occur as fears regarding a possible euro-‎zone sovereign debt default are expected to rise with Spain set to be the new principal ‎area of concern. In addition, the U.S. recovery is expected to begin to falter in the ‎coming months, which will force the Federal Reserve into taking further monetary policy ‎measures, the survey noted.‎

Thomson Reuters GFMS explained that both developments are expected to lead to a ‎period of further monetary easing beyond just the industrialized world, with China, India ‎and Brazil also forecast to adopt additional loosening strategies.‎

Klapwijk noted that these factors could lead to higher inflation especially if oil prices rise ‎on worsening tensions between Iran and the U.S. ‎

The report stated that many of the factors expected to fuel investor interest this year ‎were present in 2011 with low or negative real interest rates and shaky equity markets ‎lowering the opportunity cost of holding gold.‎

Net world investment in gold rose by 15 percent to a record level of just more than $80 billion in ‎‎2011. However, world investment in gold declined 7 percent in tonnage terms‎.

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