Gold price Outlook in 2011

Gold price Outlook in 2011

• All the analyst reports are very bullish on Gold in 2011. Most of them expect the silver to reach $ 30.
• Goldman expects, the price to average $ 1575 in 2011.
• Societe General expects this to reach $ 1485.
• BNP Paribus had revised its forecast upwards from 1275 to 1500
• Barclays sees a steady uptrend quarter on quarter and expects by Q3 it will be 1450. By the end of the year it could be 1850.
• Bank of America’s expectation is $1500.
• CIBC Canada expects it to be 1600
• Scotia capital expects the high price will be $ 1500 and it will be at $ 1400. They are the largest traders of gold in the world. 24 months it will be $ 1700.
• UBS expects an average price of 1400.


My observations :

• Gold is always a good hedge when economies don’t do well.
• US and Euro are likely to go through the pain for at least a year.
• Since US Economy is very weak, countries accumulating forex reserves want a save heaven for diversification of their assets.
• Gold provides a safe heaven.
• For the first time, China imported more gold than India.
• Since China has more than $ 2.5 trn of reserves and of that more than $ 1.5 trn has been invested in US bonds ./ treasuries, there is an immediate need for China to diversify.
• The reserves it accumulates in future, it might start investing in gold in a big way.
• Similar trends could be observed when emerging economies with good reserves start diversifying their assets.
• Since Euro is weak, US economy is Weak, Gold can play a role of good hedging against the economic risks.
• Since all the market players, who are not buying gold not for their own use but for speculation expects the prices to go up, their behaviour in the market would reflect their forecast.
• Hence, the price is bound to go up.
• Gold will be a good investment in 2011. Silver is also likely to move up well.