Gold to average US$1,580/oz in 2011, US$2,025/oz in 2012 and US$2,280/oz in 2013

The latest investment bank to raise its gold price forecasts was BNP Paribas, which published a bullish report on the Gold this week prior to the coordinated central bank actions taken this morning.

In the report, precious metals strategist Anne-Laure Tremblay wrote that “Gold’s price rebound in early Q4’11 was short-lived. The metal touched US$1,800/oz on 8 November but subsequently gave back most of its gains…The decline was thought to be largely associated with cross-asset liquidation on the back of greatly increased risk aversion. Sovereign debt concerns spread to the core countries of the Eurozone.”

“Despite price volatility, physical demand for gold has been very strong in recent months, as investors have flocked to safe haven assets,” she added. “Other macroeconomic factors, such as liquidity and inflation, have been less supportive, but we expect these to evolve more favourably in the near future, notably as both the ECB and the Fed may implement quantitative easing measures.”

Tremblay went on to say that “We now expect the gold price to peak beyond 2013. In addition, gold may trade higher than previously expected in 2012 on the back of high uncertainty, and we are likely to see greater price volatility.”

As for specific targets, the BNP strategist noted that “We expect gold to average US$1,580/oz in 2011, US$2,025/oz in 2012 and US$2,280/oz in 2013. Gold may peak in 2014 if the Federal Reserve starts hiking interest rates. Further sharp moves in the price are likely over the next months given the high level of uncertainty, particularly relating to Eurozone issues.”