Citigroup moves from 5% to 25% probability of a US$2,500 spike in gold in Proactive Investors, with a 3-year medium term price of $1500-1600.
Citigroup says gold has one-in-four chance of spiking to US$2,500 per ounce Mon 2:22 pm by Jon Mainwaring
The ongoing rise in the price of gold has prompted Citigroup to speculate that gold has a one-in-four change of spiking to US$2,500 per ounce. Today, the surge in gold continued with the yellow metal striking a record US$1,888.90 an ounce.
Citigroup had previously considered that gold had a five per cent probability of achieving the US$2,500 per ounce target, but in a note published today the investment bank said it had increased its gold price estimates in order to accommodate the impact that global financial tension is having on the metal. ?However, we expect those tensions and concerns to dissipate over time and do not believe that (price sensitive) jewellery demand will be able to make up for the loss of investment demand once sovereign financial tensions ease,? the banks? analysts said.
Citi said its upside risk is based on the premise that global sovereign debt and global imbalances worsen in 2012, but then slowly improve after that.
The bank?s new forecasts were for US$1,590, US$1,650 and US$1,500 per ounce for 2011, 2012 and 2013 respectively. And despite its view that there is a one-in-four chance of gold spiking to US$2,500 per ounce, it does not expect gold to go higher than US$1,900 per ounce during the next three years.
