The price of gold should reach $2,400 a troy ounce by the end of 2014 as a result of the U.S. Federal Reserve's latest round of quantitative easing, Bank of America-Merrill Lynch said Tuesday.
"Given the new open-ended nature of QE3, the upward pressure on gold prices should continue until employment is strong enough to warrant a change in policy. In our view, this is unlikely to happen until the end of 2014," the bank said.
Gold is often sought as a hedge against inflation and currency weakness at times of loose monetary policy.
The bank maintains its view that gold will reach $2,000/oz in the second quarter of 2013.
At 1041 GMT, spot gold was down 0.3% on the day at $1,756.32/oz, weighed down by profit-taking after a strong rally in the wake of the Fed's easing policy announcement last week. The yellow metal has never traded higher than $2,000/oz, hitting a record high at $1,920.94/oz in September last year.
source: foxbusiness.com
