Forecasting is a tricky business. The Economist Intelligence Unit’s latest gold forecast was published earlier this week, when markets were nervous about sovereign debt crises but before these fears reached a fever pitch earlier today, briefly sending stockmarkets into freefall before recovering somewhat at the end of the day.
Investors are flocking to perceived safe havens, including both the US dollar and gold. In late trading, gold prices threatened to challenge their previous record above US$1,200/troy oz set late last year (according to the fix provided by the London Bullion Market Association). The EIU expects gold prices to average US$1,150/troy oz in 2010, with prices rising steadily throughout the year. As recent events suggest, the risk to this forecast is likely to the upside.