Goldman Sachs: Gold price will hit $1,860 next year

Investment bank Goldman Sachs has raised its gold price forecast after the commodity smashed the $1,700 barrier this morning to hit a new nominal high.

The group has upped its 12-month prediction for the gold by 7.5%, believing it will reach $1,860 an ounce in 2012. The bank said the commodity is still "underbought", despite an array of investors tapping into gold to shield against market turmoil. The group's economists said the unsettling sovereign debt issues, along with a low interest rate environment in the US, will continue to boost the metal's price. "We expect gold prices to continue to climb in 2011 and 2012 given the low level of US real interest rates," Goldmans said in a note to clients on Monday. At 1pm the gold p...