Gold could hit $2,000 says BofA Merrill

Friday, 12 August 2011 00:01 - - {{hitsCtrl.values.hits}}

Dissapointing economic data and faster-than-expected credit rating downgrade of the US government could lift gold prices to $2,000 an ounce, Bank of America Merrill Lynch said on Wednesday.

The downgrade will further fuel an environment of low growth, low interest rates, and high liquidity that will set conditions for gold price to rally.

'It will probably increase the pressure on EM Central Banks to diversify their international reserves out of the US dollars and into gold,' BofA said in a research note.

The debt downgrade has made the world a riskier place, enhancing gold's status as the ultimate safe haven asset, the bank added.

The bank raised its 12-month gold price forecast to $2,000 an ounce, citing a 40 percent chance of a third round of quantitative easing (QE3) in the United States in the next 12 months.

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