Tags: BGC | Purves | Gold | metal

BGC’s Purves: Gold to Hit $2,000 by March

Thursday, 08 Dec 2011 07:52 AM

Gold prices will hit $2,000 an ounce by March as a current dip in prices is fueled by a large hedge fund unloading, says Michael Purves, chief market strategist at BGC Partners.

Gold prices are currently trading below $1,750 an ounce.

Hedge funds have been selling gold, especially high-profile investor John Paulson, who is divesting 3 million ounces of the precious metal.

Once the dust settles from hedge fund sales, expect prices to resume gains, especially as Central Banks begin stocking up.

goldcoin200AP.jpg
(Associated Press photo)
"My price target through March of 2012 is $2,000," Purves said.

"I think one thing that is weighing on gold right now what I call the Paulson factor... he owns more gold than the Central Bank of Australia. He's a major holder of gold."

According to Purves, Paulson sold roughly 1 million ounces in September, which leaves 2 million to go.

"When you have gold held in a hedge fund, which is not as stable an owner as, say, a Central Bank, that is part of this process of going from less stable hands to more stable hands."

Central Banks, Purves adds, will continue buying.

"That trend is going to continue as you see developed market currencies continue their structural debasement."

Some see gold prices hitting $2,300 an ounce in 2012, including U.S.-based Dillon Gage Metals, an investment firm and metals dealer.

"Gold's long-term prospects remain strong as demand continues to rise, while growth in world supplies should remain limited." Dillon Gage president Terry Hanlon tells Malaysia's The Edge as reported by Yahoo! Finance.

"Gold could reach $2,000 an ounce next year, and many traders are looking at $2,300, the metal's 1980, inflation-adjusted high, as a target."

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