Goldman Sachs Restates Case for Higher Gold Prices - 10 May 2012
Analysts at the US investment bank add that mid-June is likely to be a pivotal time for Gold Prices, with key policy discussions taking place in Europe and the US.
"The case for higher Gold Prices remains in place," says a note issued by Goldman analysts on Thursday.
"US economic and employment data has now disappointed for several weeks, European election results point to further stress in the Euro area, while anecdotal data suggests that physical gold demand remains resilient."
Although Goldman says the case for gold is still intact, it adds that the market is in need of a catalyst, noting that it is "increasingly apparent that already low market expectations will likely require continued deterioration in Europe or in the United States to trigger a sharp inflow into gold."
"We believe that mid-June will likely be a key period for Gold Prices," the note continues, "given the June 19-20 FOMC meeting, the likely discussion of a 'Growth Compact' at the EU summit on June 28-29, and, if no coalition is formed in Greece, a new general election likely on June 17."
Jeffrey Currie, Goldman's head of commodities research, expresses skepticism regarding the Dollar as the ultimate safe haven.
"In early 2009, we suggested that gold had become the currency of last resort, overtaking the US Dollar's status due to the rising risk of sovereign default and debasement concerns," wrote Currie this week.
"It is too early for the Dollar to reclaim this status."
A number of other investment banks, including UBS and Bank of America Merrill Lynch, have cut their gold forecasts since the start of the year.
Barclays meantime cut its Gold Price forecast on Thursday, saying it now expects gold to average $1716 an ounce in 2012.
"While the macro backdrop remains gold positive, gold has behaved closer to risky assets rather than differentiating itself as a safe haven asset," said Suki Cooper, precious metals analyst at Barclays Capital.
The 'Sage of Omaha' Warren Buffett has continued to assert that he does not see a case for Buying Gold – and was this week joined by his business partner Charlie Munger and Microsoft founder Bill Gates in urging investors not to Buy Gold.