Gold target $2000 in 2012 (Deutch Bank)

Gold may raise to $2,000 per ounce in 2012 – Deutsche Bank says

Deutsche Bank maintained its 2012 gold price target of $2,000 an ounce with a bias towards even higher prices, saying the precious metal would benefit from the low interest rates in the United States.

“We believe the main beneficiary of super low interest rates in the United States, a weak U.S. dollar, a view that central bank holdings in the U.S. dollar are still excessive and ongoing questions over the stability of the financial system will be gold,” the investment bank said.

Deutsche Bank said this rapid rise in gold prices may likely be accompanied by a weakening outlook for global growth and consequently result in lower oil and copper prices.

The probability of gold price trading at the $1,800 an ounce level for the foreseeable future is a high probability, even as a move lower to $1,600 an ounce is considered a more likely scenario than a rise to $2,000 an ounce, Deutsche said.

However, the bank said there remained a high probability of a bubble developing in the gold market, given the appetite to buy gold when the U.S. dollar is rising and falling, and to buy gold to hedge against inflation and deflation.

“For the time being this is not the economic scenario that we are forecasting, but, events in recent days have certainly moved us closer to this outcome,” the note said.

© Thomson Reuters 2011