The gold price has closed below $1,200 per ounce, having been above that level the day before, on 15 occasions since January 2011. However, it has never remained below $1,200 for longer than 15 days. We believe $1,200 represents an important support for gold due to the supply and demand responses that are triggered whenever the price falls below this level. Admittedly, prices could break sharply below $1,200 if the gold market reacts particularly badly to higher US interest rates. But we see this downside risk as more than offset by the potential upside for gold from an escalation of the crisis in Greece. Overall, we remain comfortable with our end-year forecast of $1,400.
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