Gold to hit at least $1,400/oz - Capital Economics

LONDON Thu Sep 23, 2010 8:40pm IST

Gold bars are displayed at Habib Jewels' boutique in Kuala Lumpur, September 17, 2009. REUTERS/Bazuki Muhammad/Files

Gold bars are displayed at Habib Jewels' boutique in Kuala Lumpur, September 17, 2009.

Credit: Reuters/Bazuki Muhammad/Files

Related Topics

Priyanka Gandhi Vadra, daughter of Congress party chief Sonia Gandhi, adjusts her flower garlands as she campaigns for her mother during an election meeting at Rae Bareli in Uttar Pradesh April 22, 2014. REUTERS/Pawan Kumar

Election 2014

More than 814 million people — a number larger than the population of Europe — are eligible to vote in the world’s biggest democratic exercise.  Full Coverage 

LONDON (Reuters) - Gold could rally to "at least" $1,400 an ounce next year as investors seek refuge from further uncertainty in the global economy and beleaguered financial system, Capital Economics said in a report on Thursday.

The economic research consultancy said while it remains unconvinced by some arguments for gold, the threat of further instability in the financial system was likely to spark fresh gains in the precious metal, currently near record highs.

"Fears of runaway inflation or a dollar collapse, which underpin some of the most bullish forecasts for gold, remain exaggerated," it said.

"Nonetheless, prices should continue to be supported by strong demand for a safe haven from other potential economic and financial shocks, such as a U.S.-China trade war and the break-up of EMU."

The company also lifted its year-end gold forecast to $1,200 an ounce, indicating a slight retreat from the precious metal's current $1,290 an ounce on expected dollar strength. Prices hit a record $1,296.10 an ounce on Wednesday.

Capital Economics remained relatively cool towards gold earlier this year as some commentators started to lift their forecasts for bullion prices, predicting a return to $900 an ounce in a report released in late March.

However, it said with the prospect of further quantitative easing threatening to erode the value of paper currencies, the precious metal is likely to stay in strong demand.

"With official interest rates more likely to remain near zero in the major economies for the foreseeable future (minimising the opportunity cost of holding gold) and additional QE more likely than an early exit, it is hard to see anything on the horizon to change positive sentiment towards gold," it said.

(Reporting by Jan Harvey; Editing by Sue Thomas)

(For more business news visit Reuters India)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

RAINFALL THIS YEAR

REUTERS SHOWCASE

Election 2014

Election 2014

Thousands mob Modi as election race starts in Varanasi.  Full Article 

Monsoon Forecast

Monsoon Forecast

Met office rules out surplus monsoon in 2014.  Full Article 

Facebook's Performance

Facebook's Performance

Facebook Q1 revenue grows 72 percent on rising mobile ads.  Full Article 

Earnings Season

Earnings Season

Bharti Infratel Q4 net profit jumps 64 percent.  Full Article 

Solar Dispute

Solar Dispute

Green groups urge U.S. to drop solar trade case against India.  Full Article 

Oil Imports

Oil Imports

India to make May-July oil payments to Iran - sources.  Full Article 

Rice Exports

Rice Exports

India may cede top rice exporter spot under Southeast Asian price onslaught.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage