Tuesday, July 10, 2012

Gold Price to Reach US$2000 This Year

By Rujun Shen SINGAPORE, July 10 (Reuters)

Gold prices edged down on Tuesday, pressured by a higher dollar as investors nervous about global economic growth piled into the greenback for safety. The dollar index hovered near a one-month high hit earlier this week, while the euro edged lower towards a two-year low against the greenback, after China released weaker-than-expected imports data that suggested decreasing domestic demand in the world's second-largest economy.
"The market is being a little pessimistic and cautious about the global economy, and investors are choosing the dollar as the top safety haven," said Li Ning, an analyst at Shanghai CIFCO Futures. "The strength in the dollar is in turn putting pressure on gold prices."
The Merrill Lynch analysts, however, expect gold prices to get a boost if the U.S. Federal Reserve loosens monetary policy later in the year. "Loose monetary policies, with a scope for more aggressive balance sheet use in the U.S. and Europe, will keep real rates in most reserve currencies low (or negative) during 2012. We continue to believe that this will allow investor demand to remain strong and prices to reach our $2,000/oz target by the end of the year."

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