French bank BNP Paribas upped its gold price forecasts Wednesday, saying it expects gold to average at $2,080 a troy ounce in 2012, up from $1,600/oz previously forecast.
The bank also increased its average price forecast for 2011 to $1,635/oz from $1,510/oz, while predicting the metal average at $2,200/oz in 2013.
However, the adjustments came with a word of caution, as BNP Paribas warned that a short-term correction in gold is “likely,” given the extent of the metal’s rally since the beginning of August.
At its latest record high Tuesday, the European spot price of gold traded at $1,912.29/oz, up 17% on the start of the month. Spot gold most recently traded at around $1,850/oz, having softened considerably in the last 24 hours amid widespread profit-taking.
BNP Paribas is the latest in a long line of banks and brokers to upgrade their outlook for the precious metal in recent weeks as the deteriorating macroeconomic backdrop has sent investors into the precious metal as a safer bet than equities and currencies.
Swiss investment bank UBS AG hiked its one-month gold by 13% to $1,950/oz Tuesday, saying it expects gold to exceed $2,000 a troy ounce before year-end. Earlier in the month, J.P. Morgan forecast the metal reaching at least $2,500/oz before the end of 2011.
While BNP Paribas sees gold peaking in 2013 with the expected start of monetary tightening in the U.S., it does not see a sharp decline thereafter, due to a number of enduring gold-supportive factors. These factors include high-debt levels in developed economies and increased uncertainty within the international monetary system, the bank said.
London, August 24, 2011 (Dow Jones)
