By 2012-end, gold will hit $2,000

Gold will see a bull run this year with price steadily moving upwards in each quarter and crossing $2,000/oz threshold in the fourth quarter
of 2012, say analysts.

The number of analysts predicting the price to cross $2,000/oz are increasing, insisting on the strong upside potential for the yellow
metal mainly due to quantitative easing (QE) measures by the US Federal Reserve and European Central Bank.

Echoing the recent Standard Chartered analysts’ comments, Bank of America-Merrill Lynch (BofA-ML) commodity analysts Sabine Schels and
Michael Widmer said: “We remain bullish on gold with a 12-month price target of $2,000/oz and see upside for the gold miners.”

Last week, Standard Chartered analysts also forecast that gold price would rally breaking above $2,000/oz at some point in the year ahead.

“We continue to believe gold should perform well if the Fed and the ECB print money again next year. Gold prices have moved up along with
the Fed’s balance sheet in recent quarters, and we would expect that to continue going forward. Just like it has in previous rounds of
quantitative easing, a third round of asset purchases, this time focused potentially on mortgages, should provide a further lift to
gold prices in 2012.

“In our view, Fed QE has been perhaps the most important driver of gold prices in the past three years because this policy heavily influences real interest rates, commodity prices and the US dollar all at the same time,” Schels and Widmer said in a note.

The yellow metal was trading at $1,723.75 an ounce in Hong Kong on Friday. The Bank of America-Merrill Lynch analysts have projected that
the gold prices will hit a high of $1,850/oz this quarter but will fall to $1,750/oz in the next. But the price, according to the forecast, will recover slightly in third quarter to $1,800/oz and hit the year-high of $2,000 in the last quarter.

The analysts, however, warned that austerity measures by the US and European government may take the sheen off the yellow metal and could impact it negatively.

“The US government budget deficit projections are among the least healthy in the world, and there is a risk that America will move into
fiscal tightening next year. In Europe, government budget deficits are also at the heart of the heated debate on sovereign debt. As a result,
European budget deficits may be set to shrink over the coming years on increasingly stringent fiscal austerity plans.

“In our view, fiscal austerity could impact gold negatively over the coming years. Against this trend, low economic growth or even our
projected recession for the Eurozone means that government debt-to-GDP ratios will continue to increase quickly, a clear point of support for
gold prices,” they added.

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