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Los Angelas, CA -- (SBWIRE) -- 03/05/2013 -- Bank of America Corp (NYSE:BAC) expects gold to climb $1,680 in 2013.The growth in US nominal rates and improved economic conditions are the main forces behind the current gold prices cut by Bank of America Corp Merrill Lynch.
According to the lender the gold is unlikely to break the 2000 US dollars per ounce limit until 2014. For 2013 the bank reduced average price forecast for gold to 1680 US dollars and for 2014 the price cut short to 1838 US dollars per ounce.
The US nominal rates are tied with cost of storing gold and a growth in rates will mean surge in cost. The current rise in nominal rates is driving a vital drag on investment interest in the metal.
Investment in gold tends to be south as a hedge against inflation however the positive economic sentiments doesn’t seem to want such asylum. The bank said that several factors could boost gold prices in the long term, despite short term headwinds.
On Tuesday gold prices advanced moving in step with a weaker dollar and soaring global stock markets. The April gold delivery advanced 0.4 % or 6.5 US dollars to 1578.90 US dollars an ounce in electronic trade. In the previous trade gold surged 0.10 US dollars to close at 1572.4 US dollars an ounce.
The mounting concerns over automatic spending cuts in the US have weighed on the precious metal. On Monday the Federal Reserve Vice Chairman Janet Yellon said the bank should not scale back on easy policy stance. Generally the loose monetary policy supports gold’s draw as an inflation hedge. The nonfarm payrolls data is expected at the end of this week and analysts said this should also not deter the central bank from quantitative easing.
In Asia the mainland Chinese stocks advanced 2.3 % making a recovery from the earlier day slump of 3.7 % which was the poorest since August 2011.
Bank of America Corp (NYSE:BAC) shares surged 1.67% on Tuesday.
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