Banks: Gold Expected to Hit $2,000

With the price of gold continuing to soar—after a third
record a day in a row on Aug. 10–world banks are revising upwards their predictions
about gold.

JPMorgan Chase had what seemed to be the highest estimate, with
researchers predicting that gold would hit $2,500 by the end of the year, according
to Barrons.

The Bank of America Merrill Lynch also raised its 12 month
gold forecast to a more modest $2,000 an ounce, according to a research note
published by Reuters.

That prediction was echoed by Deutsche Bank, which also moved its
2012 gold forecast to $2,000 an ounce, according to Reuters.

But the bank also raised the possibility of a gold “bubble”
if too many people get into it.

Finally, analysts from brokerage firm Stifel Nicolaus also
expect gold to hit $2,000—but that’s in the year 2013, according to The Financial Post.

The banks all cited the prospect of inflation, fears of
economic instability, and growing interest from central banks in their

“We will turn negative on gold only once real interest rates
in key gold demand markets, including China and the U.S., show signs of turning
positive,” said the Stifel analysts.

Still, all these predictions are conservative next to the
prediction made by Standard Chartered Bank in June, when
it forecast gold would hit $5,000 an ounce
in the next decade.

At press time, gold was trading at $1,756 an ounce, after
hitting a record $1,817 an ounce on Aug. 10.