Gold prices: Could they hit $2,500 in 2012?
Gold prices have fallen in recent months and many analysts expect the correction to continue. But one analyst sees gold prices rallying next year.
Petr David Josek/AP/File
Gold prices will rally again in 2012 to reach $2,000 to $2,500 per ounce because demand is still strong and the precious metal is still seen as a safe haven, according to Sabine Schels, a commodities strategist at Bank of America Merrill Lynch.
Despite the correction inÂ gold pricesÂ in recent months, Schels said sustained investor demand would result in gold prices averaging $1,850 in 2012, up from $1,573 in 2011.
Â â€śWe see no let up in investor interest.Â Exchange traded fundsâ€™Â levels continue to hold up,â€ť she said.
Â Schels said the negative outlook forÂ sovereign debt, coupled with easy monetary conditions in the euro zone, the USÂ Â and Japan, meant gold would retain its "safe haven" status, while still offering comparatively strong returns.
Â Gold will also benefit from a continued need forÂ central banks in emerging markets to diversify their holdings, she said.
Â Schelâ€™s view differs from some other market participants, who say the sell-off in the precious metal will continue.
Â Earlier last week, commodities trader and economist Dennis Gartman told CNBC he expected the precious metal toÂ fall to $1,500 per ounce or lower, and has sold off his personal gold holdings. Meanwhile, trader Steve Cortes predicted anÂ even steeper fall-off to $1,000.
Â Crude Oil
Â Schels was also upbeat aboutÂ crude oil, predicting that the benchmark West Texas Intermediate (WTI) will average $101 per barrel in 2012, up from $95.12 this year.
Despite concerns about demand growth due to the anemic global economic picture, Schels said a combination of low oil inventories and further monetary policy loosening will probablyÂ support oil pricesÂ in the second half of 2012.
â€śThe break-even price is at around $80 per barrel. That will act as a capital incentive to manage production levels,â€ť she added.
To diversify, Schels recommendedÂ soybeans, which she said have â€śuncorrelated upsideâ€ť. She said the asset class will benefit from a continued, and steep, drawdown in inventories, which will reverse the fall-off in price seen since September this year.