LONDON (Commodity Online): The present macro economic environment is positive for gold while strength in the U.S. dollar would be a headwind, according to Morgan Stanley in a research note. It anticipates aggressive Federal Reserve monetary-policy action, including the likely adoption of a third round of quantitative easing in the first half of 2012, to support gold prices.
“We forecast prices to rise on a quarterly average basis through 4Q13,” Morgan Stanley added.
According to Morgan Stanley, constrained new gold supply is placing greater emphasis on increased delivery of above-ground stocks to meet demand.
Morgan Stanley said, “However, in the absence of central-bank sales, and limitations on the size of the available scrap pool, the continuation of physical demand growth from ETFs and coin sales is putting upside tension on the market, ensuring the bull market is sustained into 2012-13.”
Meanwhile, Morgan Stanley expects silver to remain volatile in 2012 as worries about slowing industrial demand increase pressure on the metal’s traditional link to gold.
“We believe that the recent weakness in silver prices should attract bargain hunters, especially given the low opportunity costs in the current period of low interest rates,” Morgan Stanley concluded.
