Source from (Business Times): http://www.btimes.com.my/Current_News/BTIMES/articles/goldrally/Article/
Published: January 22, 2013
"We see current prices as a good entry point to re-establish fresh longs," analysts Damien Courvalin and Alec Phillips wrote in a January 18 report. The bank reiterated a three-month target of US$1,825 (RM5,511.50) an ounce, as well as a forecast for prices to weaken in the second half as the US economy rebounds.
Gold fell 5.5 per cent last quarter, the worst performance since 2008, on expectations for a recovery and potential end to central bank stimulus in the US. An advance to US$1,825 would be consistent with rallies into debt-ceiling decisions, the analysts wrote. Since 1960, Congress has raised or revised the debt limit 79 times, according to the Treasury Department.
"The uncertainty associated with these issues, combined with our economists' forecast for weak US GDP growth in the first half of 2013 following the negative impact of higher taxes will push gold to the three-month target," they wrote.
The Treasury has said the US will exceed its US$16.4 trillion borrowing authority sometime from mid-February to early March. Financing for government agencies is set to lapse on March 27, and lawmakers must pass new spending or cause a shutdown. Also in March, Congress will confront the US$110 billion in automatic spending cuts, half from defence, that were postponed in a January 1 tax deal.
Goldman restated its outlook for lower prices in the second half of this year, a call echoed by Credit Suisse Group AG and Allan Hochreiter (Pty) Ltd, as the US recovers. As growth improves, prices will likely decline even with continued central bank and exchange-traded fund demand, Goldman said. Bloomberg
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