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Gold Tests $1,700 On Discount Buying, Possible European Rate Cut

Does Goldman Sachs stand alone on the end of gold bull market?

Investment heavyweight Goldman Sachs (NYSE:GS) threw in the proverbial gold towel on Wednesday, cutting its 2013 gold outlook on mounting downside risks. The bank reduced its three-month gold forecast to $1,825 per ounce, its six-month to $1,805 per ounce and 12-month to $1,750 per ounce.

In the report, Jeffrey Currie, a Goldman analyst, commented, "[i]n the short term, the combination of more easing and weaker growth should prove supportive to gold. Medium term, however, the gold outlook is caught between the opposing forces of more Fed easing and a gradual increase in U.S. real rates on better US economic growth. Our expanded modeling suggests that the improving U.S. growth outlook will outweigh further Fed balance sheet expansion and that the cycle in gold prices will likely turn in 2013.”

Gold analyst Ron Rosen, however, is not on board with Goldman's call for the gold bull market, calling the outlook "ridiculous."

"In spite of all of the negative press gold is receiving today on CNBC because of Goldman Sachs' call for the end of the gold bull market, everything is right on schedule. The timing of this ridiculous proclamation by Goldman Sachs could not have come at a more perfect time," Rosen said on King World News.

Rosen still expects a lot of upside potential for the gold market in the coming years.

Morgan Stanley has named gold an outperformer for 2013. The financial firm explained that "[h]igher prices in recent years have brought both a supply and demand response, bringing many to call for the end [of the supercycle]. We view this as too simplistic. Commodities are cyclical but the elasticity of supply and demand, as well as the length of the cycle, vary significantly.”

The close

Gold spot prices touched a high of $1,704.40 on Thursday and closed at an even $1,700.

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