Bank of America Corp (BAC): Why Gold Could Hit $2,000 Next Year

LONDON — Spot gold has made a rather unspectacular start to 2013. The precious metal has retreated 4.7% since the start of the year to $1,580 per ounce, as improved market sentiment has driven capital flows into riskier assets and away from safe havens.

Despite the price fall, Bank of America Corp (NYSE:BAC) expects bubbly central-bank activity to push gold higher again — the bank expects the metal to surpass $1,750 per ounce as the year progresses, before finally pushing through $2,000 to fresh new peaks in 2014.

Investors can hitch on to rising gold prices through SPDR Gold Trust (ETF) (NYSEMKT:GLD) and Gold Bullion Securities Limited (LON:GBS), instruments that are designed to track movements in the metal price.

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Bank of America Corp (NYSE:BAC) has, in recent days, cut its gold-price forecasts for the next two years. The bank now expects the yellow metal to average $1,680 per ounce and $1,838 per ounce this year and next, down from the previous projections of $1,805 and $2,038.

Although the bank has become more cautious with its estimates, it believes that gold remains on an uptrend that should persist until 2014. The institution predicts gold to average $1,650 and $1,600 per ounce in quarters one and two before marching steadily higher from the middle of this year.

The yellow metal is expected to average $1,700 in quarter three and $1,750 in quarter four, before marching to $1,850 and $1,900 in the first and second quarters of 2014.