Despite the recent weakness in precious metals, the longer-term outlook for
gold and silver remains bright, according to BNP Paribas. In a note to clients
published this morning, precious metals strategist Anne-Laure Tremblay wrote
that "The correction in precious metal prices, and particularly in gold and
silver, was initially triggered by Bernanke's semi-annual testimony to
Congress, in which he made no specific references to QE3. Sentiment towards gold
was hit by more elusive timing of QE and the confirmation of a more positive
economic outlook in the latest FOMC minutes." Tremblay went on to say that
"Beyond the short term, we remain positive on gold's outlook as the
fundamentals are still solid. These include high liquidity, low interest rates
and sovereign debt concerns. An improving macroeconomic outlook and high risk
appetite should see silver outperform gold for most of H2'12 and 2013 although
silver, like gold, remains vulnerable to waves of liquidation. As a result, the
gold/silver ratio should decline to the low 40s by H2'13." In light of the
above, Tremblay maintained her 2012 and 2013 gold price targets of $1,850 and
$2,225 per ounce, respectively.
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