Don’t get Goldman Sachs wrong, the bank still believes gold is overvalued, however, in the near term, its commodities research team is raising its gold forecast:
We believe that these elements of financial and sovereign risk will likely remain a feature of the market over the near term, after which the gold price will likely trade back closer to the fair value currency basket. As a result, we are raising our 3-month ahead gold price forecast to $1000/toz from $700/toz, our 6-month forecast to $950/toz from $785/toz, and our 12- month forecast to $825/toz from $795/toz. Clearly, if financial risks as measured by the CDS spreads remain high, gold prices could remain higher for longer, presenting upside risk to our forecasts.
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