Goldman Sachs: Gold Going to $1,650
By Liam Pleven
Gold at $1,400 per troy ounce? Not such a bold prediction these days, with gold hovering around $1,350.
Well, how about $1,500? That’s starting to sound a little bullish.
Could it even reach $1,600 next year?
If thatseems like the kind of figure a feverish goldbug might throwaround,consider this: Goldman Sachs just raised its 12-month forecast to $1,650.
Inraising its sights for gold, the Wall Streetgiant cited the recent rallyand persistently low interest rates in theU.S., as well as the potentialimpact if the Federal Reserve intervenes further to prop up the economy.
More so-called quantitative easing would be a “strong catalyst to drive gold prices higher,” concluded the analyst, David Greely.
Nooneknows for sure what the Fed will do, or when, but hopes have been risingsince the Fed expressed concern in September that inflation was actuallytoo low. Gold, of course, if often seen as a hedge against inflationrunning out of control, which suggests the rally may be driven by ageneral lack of faith the Fed will be able to calibrate any interventionwith precision.
Goldman Sachs’ prior 12-month forecast for the goldprice was $1,365 -only about $12 higher than gold’s settlement price onMonday, the day the bank issued the report. But the higher prediction camewith a caveat, that gold prices could get pushed down when the U.S.economy strengthens and the Fed starts tightening monetary policy.
And what are the chances of that happening soon?
“As discussedby our U.S. economists, models suggest that it might in fact take until2015 or longer before a rate hike became appropriate,”Mr.Greely wrote,though he added that the bank’s economists “emphasize that this is ascenario, not a formal forecast.”