Goldman Sachs forecasts $1,940/oz gold, cuts commodities traders

The slow growth in the United States will most likely support gold prices to higher levels in 2012. Goldman Sachs has made 3-month, 6-month, and 12-month forecasts for gold and sees the metal rising to $1,940 within the next year. They also recommend a long term position for the metal.

Author: Dorothy Kosich
Posted: Friday , 30 Mar 2012

Goldman Sachs has reiterated its constructive outlook for gold prices this year and its 3-month, 6-month, and 12-month forecasts of $1,785 per ounce, $1,840/oz and $1,940/oz respectively.

"We acknowledge, however, that continued strong US economic data poses growing risk to our forecast for rising gold prices," said commodities analysts Damien Courvalin, David Greely, and Jeffrey Currie.

The analysts stressed they expected gold prices to climb "as subdued US growth reduces the market's expectation of real rates. Consequently, we recommend near-dated consumer hedges in gold through 2012."

"With gold prices expected to continue to climb through 2012, we find hedging opportunities less attractive for gold producers at this time," they advised.

Goldman Sachs also continued to recommend a long gold position. "Buy December 2012 COMEX Gold (initial value of $1,800.5/toz, current gain $318.13/toz)," the analysts suggested.

Meanwhile, Reuters has reported that at least 20 commodities traders have left Goldman Sachs in the past months. Goldman said the departures will not have an impact on its standing in commodities.

"We are not downsizing our commodities business, it remains a core part of our franchise," a Goldman spokesman told Reuters.

Goldman is believed to employ around 400 traders in its commodities division, which generated $1.6 billion last year, Reuters reported.

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