Gold forecast to trade in US$1,523-1,800/oz range this year

Gold will trade in a range of between US$1,532/oz and US$1,800/oz this year, as the markets keep closely watching developments in Spain with regards to its sovereign debt situation, Manuel Sousa Andrade, the head of client trading services for Latin America at Denmark's Saxo Bank, told BNamericas. "Right now, we are seeing a lot of put options buying and the market keeps looking for direction for the next movement on gold prices," Sousa Andrade said. Gold has been lacking a catalyst to propel prices to the upside and has also faced weak physical demand. However, demand from investors looking to reduce risks, an increasing sovereign debt risk and the growing wealth of the middle class in Latin America, India and China are still supporting an upward trend for the yellow metal, according to Sousa Andrade. Higher global gold production in 2012 will not have a significant impact on prices this year. "We believe that while politicians in Europe are not able to reduce sovereign debt to credible levels, investors will maintain long positions, but the short-term price will show volatility," Sousa Andrade said.