The price of gold in the fourth quarter will rise to an average of $1,875 per ounce, a nearly 15 percent increase from gold's closing price Friday, Barclays Capital said.
We would expect gold prices to continue to be cushioned amid the seasonally strong period for demand and remains key before investment demand returns to the driving seat, analyst Suki Cooper said Monday in a client note.
Heightened uncertainty over the state of the global economy, and Europe in particular, provide a gold-fertile backdrop and we retain our positive view on gold.
Cooper set the fourth quarter price forecast at $1,875 and the 2012 annual average at $2,000.
The analyst cited as two contributing factors increased central bank buying, including from Turkey, Mexico and Peru, and supply disruptions, particularly from Freeport McMoRan's Grasberg mine in Indonesia, where a strike could lead to the potential production loss of about 10 metric tons of gold.
Economic and financial developments will also support a rising gold price, Cooper said.
In the U.S., the head of the central bank recently said some of the recent sluggish growth emanates from more persistent factors.
Regarding Europe, Barclays Capital said its our economists note the intensification of financial market tensions and the scope of related problems have signaled that the currently approved revisions are falling short of what is required.
Barclays also expects the European Central Bank to lower its policy rate on Dec. 8, further weakening the euro.