Gold prices will rise later this year and into next year, Goldman Sachs said Tuesday, in a note expressing relative optimism about the near-term prospects for the global economy.
The investment bank also reiterated its 12-month price target of $1,860 per troy ounce but forecast a slowing U.S. economy through next year.
We expect gold prices will continue to be driven in large measure by the evolution of U.S. real interest rates and with our U.S. economic outlook pointing for continued low levels of U.S. real rates in 2012, Goldman said.
The bank lowered its outlook for 2012 global GDP growth to 3.5 percent from 4.3 percent and distanced itself from the view that a European recession would lead to a world recession.
The lesson learned from 2008 is that emerging market growth can be relatively resilient to a slowdown in developed market growth, barring a global financial crisis. With recent gross domestic product revisions by our economists falling hardest on Europe but emerging market growth expectations still relatively solid, we continue to believe that demand growth in 2012 will be sufficient to tighten major commodity markets.