LONDON (Commodity Online): Gold to hit north of $2,150 an ounce later this year, particularly after this week’s uber dovish Federal Open Market Committee statement and a news conference by the Fed chairman signaled easy money is here to stay for a long time, said TD Securities in a research note.
According to TDS, Wednesday’s rally of the FOMC meeting a preview for the rest of 2012.
“As the Fed augments its stimulus, and if the economy continues to recover, investors will be increasingly worried that the U.S. central bank is behind the inflation curve. Real interest rates should trend even lower, reducing opportunity costs of holding zero-yielding assets, and thus increasing demand for real assets such as commodities, particularly gold,” TDS added.
The continuation of the Fed’s so-called Operation Twist program will mean lower long-term real interest rates, as will a new round of quantitative easing later in the year. Continued record-low interest rates will also undercut the dollar over the longer term.
TDS has upped its 2012 gold forecast to $1,925 from $1,855 and its silver forecast to $38.50 from $36.45.
