Waning confidence spurs gold outlook

Waning confidence in the strength of global economic recovery and persistent concerns over Eurozone debt levels since January have prompted some leading analysts to lift their 2012 gold price forecasts, a Reuters poll showed yesterday. A poll of 15 analysts conducted by Reuters in the past two weeks has returned a median forecast that gold prices will average $1,550 an ounce in 2012. This is about 7 per cent higher than the consensus forecast in January at $1,454. While hopes were high in January that the US economy would stabilise and the Eurozone debt crisis come under control, those expectations have faded. Spot gold hit a record high yesterday of $1,594.16 an ounce after Federal Reserve chief Ben Bernanke said the Fed was ready to ease monetary policy further if economic growth slows and Moody's warned the United States might lose its top-notch credit rating. "The US has a whole lot of issues in the economy. Managing debt is one of them, and what that will entail is a whole lot of measures that are really supportive for gold," said Bank of America Merrill Lynch analyst Michael Widmer. "What the government would want to see is probably a higher inflation rate than before, and it would also help them if they had a weaker dollar and lower nominal interest rates. So you have got three factors that are supportive for the gold market." From / Gulf News