Bank expects U.S. dollar to weaken against the euro for the rest of the year
U.S. gold futures fell to $1722 per ounce last week to a six-week low but has climbed on Monday to $1725 in electronic trading. Barclays Research remains firmly bullish on
gold.
Gold prices slipped on profit taking amid stronger dollar and reduction in risk appetite with equity markets also weakening, Barclays said. Speculative positions have fallen to a four-week low and although physically backed ETP holdings have eased from record highs, overall metal held in trust remains close to its recently attained peak. Physical demand in India has softened as the local price has risen in turn providing reduced buffer. Market focus this week will shift to the FOMC meeting, which we do not expect to negatively impact
gold.
Given our FX view for the USD to weaken against the EUR over the remainder of 2012, coupled with the physical market's recent responsiveness to lower prices, we retain a positive outlook for prices. Price forecast: Q4 12: $1810/oz; 2012 annual average: $1691/oz.
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