Gold Price Could See “Super-Bull Scenario”, says Standard Chartered

The Gold Price could hit nearly $5000 over the next decade, according to new research from one of the largest banks in Asia.

A note put out Thursday by Standard Chartered predicts that the Gold Price could rise by more than 40% over the next three years, and may go even higher.

"Our base-case forecast is that prices rally to peak at an average $2107 an ounce in 2014, although our statistical modelling also suggests a possible 'super-bull' scenario of Gold Prices rallying up to $4869 an ounce in nominal terms by 2020," said the note.

Standard Chartered believes strong Asian demand for Gold Bullion – in particular from China and India – will help drive the Gold Price.

"We find that there is a powerful relationship between income per head in Asian emerging markets and the Gold Price, which suggests further significant upside for gold."

The research note does, however, cite factors that could weigh down on the Gold Price.

"We expect some headwinds for gold to come from higher US rates, but we find that the impact of higher rates is rather muted and we do not expect this to derail gold’s rally for now," it said. "More important, we believe, will be the impact of higher mine production. We expect a steady acceleration in mine-supply growth in the years ahead, which should overwhelm demand growth beyond 2014".

Pierre Lassonde, the widely-respected former president of Newmont Mining Corporation and co-founder of gold royalty company Franco-Nevada, also believes Chinese demand could drive the Gold Price far higher. In an interview last year he agreed that a Gold Price of $5000 an ounce was not unreasonable, and would not necessitate widespread economic collapse.

"[Would] $5000 gold imply that the US economy is going to collapse…not at all. I don't believe that for one second, " he said.

Gold Bullion imports into China rose nearly fivefold last year. More than 209 tonnes of Bullion were imported, compared to 45 tonnes in 2009.

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