JPMorgan says gold may jump to $2,500/oz by yr-end

BANGALORE Mon Aug 8, 2011 11:18pm IST

Wiener Philharmoniker gold coins are pictured at the Ginza Tanaka store in Tokyo February 23, 2011. REUTERS/Yuriko Nakao/Files

Wiener Philharmoniker gold coins are pictured at the Ginza Tanaka store in Tokyo February 23, 2011.

Credit: Reuters/Yuriko Nakao/Files

Related Topics

BANGALORE (Reuters) – JPMorgan said on Monday it expects spot gold prices to climb to $2,500 an ounce or higher by year-end, on very high volatility, following the downgrade of U.S. debt.

"Before the downgrade, our view was that cash gold could average $1,800 per ounce by year end. This view will likely now prove to be too conservative," analysts Colin Fenton and Jonah Waxman said in a note to clients.

Spot gold was up 2.8 percent at $1,708.59 an ounce by 12:11 p.m. EDT (1611 GMT), having hit a record $1,715.01 earlier and marking all-time highs against sterling and euros .

While the analysts expect most commodity markets to convulse lower after the downgrade, those geared to the growth of emerging markets, infrastructure investment and inflation could stabilize relatively faster and outperform markets more anchored to developed economies and consumption.

"The macro backdrop better parallels mid-cycle pauses in 1995 and 1998, rather than end cycle 1981 or 2008, though the risk of a worse outcome is rising and should not be ignored," they said.

The analysts said they would want to own a basket of Brent crude oil, gasoil, gold, raw sugar, copper, corn, and wheat in the near-term, while underweighting or shorting a basket of WTI crude oil, RBOB gasoline, aluminum, zinc, and North American natural gas.

The revised gold price estimate puts JPMorgan way above the consensus view of $1,602.58 an ounce in a Reuters poll on July 22.

(Reporting by Antonita Madonna Devotta; Editing by Alden Bentley)

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

Markets

REUTERS SHOWCASE

Canada Shooting

Canada Shooting

Attack on parliament, killing of soldier stun Canada's capital.  Full Article 

Earnings Season

Earnings Season

Wipro sees rosier end to year as U.S. clients spend.  Full Article 

Business Climate

Business Climate

Fears for tough penalties grow as India cleans up business  Full Article 

New Email Service

New Email Service

Google launches new email service dubbed "Inbox".  Full Article 

DLF Appeals

DLF Appeals

DLF seeks interim relief from capital market ban  Full Article 

Falling Oil Prices

Falling Oil Prices

Indian consumers respond to softer oil, food prices  Full Article 

Book Keeping

Book Keeping

RBI fires warning shots on companies' lack of FX hedging.  Full Article 

Policy Repo Rate

Policy Repo Rate

Most external members suggested rate cut in RBI's Sept review.  Full Article 

Reuters India Mobile

Reuters India Mobile

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