Futures Gold Prices Forecast 2012 report TD Economics

Gold prices will soar to $2,100 U.S. an ounce in 2012, leading a general rebound in commodity prices that will emerge once Europe gets its act together, TD Economics said in a report Thursday. TD's report casts the outlook in a more optimistic light than a report issued Wednesday by BMO Capital Markets. TD's Cover expects precious metals to be a top performer in 2012, saying history shows easy monetary policy and economic financial stress ? likely to continue into 2012 ? are supportive for gold prices. Bullion should climb from current levels of about $1,750 U.S. an ounce to average $1,975 in 2012, rising to $2,100 U.S. in the fourth quarter, the outlook says.

While worries about another global recession and a financial crisis in Europe have led to a widespread pullback in commodity prices in recent months, a recovery in 2012 will be supported by low interest rates, strong investor demand, global economic growth that will average just above three per cent and tighter physical supply, Cover said.

Gold prices should firm once the clouds engulfing the macro environment dissipate, BMO's outlook says, while cautioning, with demand prospects hit by weaker global economic growth and heightened risk aversion, prices for a number of commodities, especially those closely linked to industrial production, will likely struggle to make any serious headway over the next year.

She also expects base metals to fare well, supported by rising demand and modest production growth. Copper will be the only metal in a supply deficit position in 2012, lifting prices to an average of $3.95 U.S. a pound from current levels of $3.38 U.S. a pound.

Overall, Cover points out, commodity prices in 2012 will be lower ? on average in 2012 ? but that masks underlying strength that will see prices trough in the current quarter or the first quarter of 2012, then resume their ascent.