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Bank of America Merrill Lynch raises Gold Price forecasts

A major US financial institution announced on Thursday (March 5th) that it is increasing its Gold Price forecasts for this year and next year, Market Watch reports.

Bank of America Merrill Lynch has confirmed that it now puts the yellow metal at an average of $1,000 per ounce for 2009, a significant increase from its previous estimate of $875 per ounce.

Furthermore, the company has raised its 2010 prediction from $900 per ounce to $1,050 per ounce, which appears to indicate that Investing in Gold at the current price of around $920 per ounce would be a wise move.

Explaining its decision, the bank was quoted by the news provider as saying: "We believe the outlook for precious metals is much more promising.

"Increasing inflation expectations, a shift toward liquid assets, a rapid increase in credit risk, falling stock markets and a wave of monetary and fiscal policies are contributing to fuel a rally in gold prices."

Those views were echoed yesterday by Adrian Day, president of Adrian Day Asset Management in Annapolis, Maryland, who explained that a lack of faith in major currencies is increasing gold's appeal.

"Gold is being driven by concern about the financial system and lack of confidence in paper currencies. All the pressure is on the upside," he told Reuters.

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