Goldman Sachs sees $1,840/oz Gold by end of 2012

NEW YORK (Commodity Online): New York based global investment banking firm Goldman Sachs Group is maintaining a bullish view on gold and lists a year-end forecast of $1,840 an ounce.

"As we look forward, our U.S. economists forecast subdued growth and further easing by the Fed, which should push the market's expectations of real rates back down and gold prices back to our 6-month forecast of $1,840/toz," the American bank added.

According to Goldman Sachs, a sharp decline in Comex gold net speculative length over the past six months has been the biggest driver to "weakness in gold prices relative to what we believe are supportive fundamentals," including record-low U.S. real rates and strong physical demand for gold.

"Specifically, central-bank gold buying has continued unabated with preliminary IMF data pointing to gold purchases of 4.64 million toz in the March-May period, the second-largest purchase in a 3-month window since February 2010. More impressively, ETF gold holdings set a new record earlier this month, with their holding levels continuing to inversely track the decline in U.S. real rates remarkably well," the bank concluded.