Gold at risk of falling to $1,200 per ounce: BofA Merrill Lynch
By Reuters | 16 Apr, 2013, 07.12PM IST
Bank of America Merrill Lynch said on Tuesday that gold may fall to $1,200 per ounce before prices stabilize.
Downward pressure on gold prices has been heavily influenced by the current macro economic environment, it said."Fears of disinflation combined with news of potential central bank gold selling have been enough to trigger this dramatic sell-off," BofA analysts said.
The bank noted that although central banks have been easing, much of the additionalfunding has been parked in excess reserves, making gold a somewhat less viable investment proposition.
The bank saw no compelling reason to increase exposure to gold right now, considering muted inflationary pressure and rising nominal rates across maturities on the U.S. yield curve, which will raise opportunity costs to hold gold.
Downward pressure on gold prices has been heavily influenced by the current macro economic environment, it said."Fears of disinflation combined with news of potential central bank gold selling have been enough to trigger this dramatic sell-off," BofA analysts said.
The bank noted that although central banks have been easing, much of the additionalfunding has been parked in excess reserves, making gold a somewhat less viable investment proposition.
The bank saw no compelling reason to increase exposure to gold right now, considering muted inflationary pressure and rising nominal rates across maturities on the U.S. yield curve, which will raise opportunity costs to hold gold.
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