Gold, Silver seen strong next year : CIBC

CIBC forecasts a stronger year for gold and silver prices next year. It has maintained its price target of $2,000 an ounce for gold, and its target of $35 for silver.

TORONTO(BullionStreet): Canadian Imperial Bank of Commerce (CIBC) lowered its forecast for gold and silver on less demand from India and also assuming that the US Fed is not going to announce QE3 this year.

According to the new forecast, gold is likely to finish this year at $1700 an ounce,down 6% from it's previous forecast of $1,800 an ounce.

Silver's new forecast calls for the precious metal to end 2012 at $32.50, from a previous target of $35,a 7% decrease.

CIBC said that gold and silver prices will also have less support from India, which has been a strong buyer of gold in particular. A weaker rupee in India is the main reason behind the fall.

CIBC forecasts a stronger year for gold and silver prices next year. It has maintained its price target of $2,000 an ounce for gold, and its target of $35 for silver. Analysts said that QE3 will likely become an option for the Fed again in 2013, which should support gold and silver prices.

Gold and silver prices have suffered in the last few months, joining a broader decline for commodity prices as fears over a Greek exit from the euro zone pushed many investors into safety such as bonds or the dollar.

Many were hoping that announcement from the U.S. Federal Reserve of additional easing, dubbed QE3 by markets, would help boost gold prices, given that many investors look at gold as a hedge against inflation.

However, the Fed announced last month that rather than QE3, it would extend its Operation Twist program of buying long-term bonds in an effort to drive down yields.