Merrill raises gold view, still sees $700 by May

NEW YORK (Reuters) - U.S. brokerage Merrill Lynch raised its long-term forecasts for gold prices, citing positive supply-demand fundamentals, while keeping its view unchanged that bullion could hit $700 an ounce by mid-May.

In a research note dated Monday, Merrill lifted its view of gold prices to $675 from $650 an ounce for 2008, up to $650 from $625 an ounce for 2009, and to $625 from $600 an ounce for 2010.

"Our near-term view remains that gold will trade to $700 an ounce by mid-May on the back of buying for the looming Indian wedding season," Merrill Lynch analyst Michael Jalonen said in a research note.

Merrill also said it was raising its 2007 silver forecast to $13.75 from $13.00 an ounce, and increasing its price forecasts for 2008, 2009 and 2010.



Spot gold was quoted at about $660 an ounce on Tuesday. It has gained nearly 10 percent from its five-month low in January, but was still sharply below its 2007 high of $689 an ounce set on Feb 26.

Silver traded around $13.35 an ounce on Tuesday, and has declined about 9 percent from its year high of $14.72.