Western analysts make short-term forecasts on gold prices

Azerbaijan, Baku, Apr. 6 / Trend A.Badalova /

UK analysts do not believe in strengthening the price on gold. Rather, they believe the price will drop below the $1,000 per troy ounce by late 2010.

Analysts at the leading UK consulting firm Economic Research Capital Economics reported that today the price on gold in such currencies as sterling or euro is at a record high. This shows the weakness of these currencies against the dollar rather as opposed to the outright value of gold.

As a result of trading on COMEX April 5, June gold futures rose by $7.70 to $1,133.80 per troy ounce, which was the highest mark last month. A record level of prices on gold was seen in early December 2009 at $1,227 per troy ounce after which prices again began to fall.

Capital Economics thinks there are many factors supporting the price on gold, however, several reasons were identified for a future price drop. The main factor is the strengthening U.S. dollar in recent months.

Capital Economics analysts believe the price on gold will fall to $900 per troy ounce by late 2010 compared to the $950 forecast by the bank earlier on the backdrop of easing inflationary fears and the further strengthening of the dollar. By late 2011, analysts expect the price on gold to be on the same level.

However, not all analysts are pessimistic when it comes to short-term prices on gold.

One of the largest British banks Standard Chartered Plc expects the price on gold to hit $1,175 per troy ounce in 2010 compared to the $1,150 per troy ounce forecast earlier. A possible increase in interest rates by the Federal Reserve may support the price on gold. The bank lowered forecasts from $1,300 per troy ounce to $1,100 last year.

One of the largest U.S. investment banks Goldman Sachs raised its forecasts on the price on gold by nearly $10 last month. The bank expects the average gold price to reach $1,390 per troy ounce by late 2010.

According to the forecasts of the Swiss investment bank UBS, the average price on gold next year will hit $1,150 per troy ounce.

Forecasts on the price on gold in 2010-2011 (in $ / troy ounce)