GOLD PRICE NEWS - The gold price attempted to retake the $1,200 per ounce level while UBS became the latest bank to raise its gold price forecast. Despite a recent drop in sentiment toward the gold price, a number of the world’s largest investment banks recently made a case for strong gold prices in coming years due to the continued challenges facing the global economy.

UBS was the latest investment bank to raise its gold price forecast as the Swiss bank boosted its 2010 forecast to $1,205 per ounce from $1,129 and its 2011 outlook to $1,295 from $1,250. The bank noted that “We believe that ongoing pressure on sovereign debt markets, combined with persistent concern over private sector credit contraction will raise the specter of debt monetization repeatedly over the next few years.”

UBS is the third major investment bank this week to raise its gold price forecast. Yesterday, TD Securities raised their gold price forecast to $1,300 per ounce in 2011 (from $1,100) and to $1,400 per ounce in 2012 (from $1,000). The boost was due to TD’s view that “gold should benefit from the uncertainties facing the global economy and a continued trend by investors and institutions to seek ways to insulate their portfolios against these ongoing risks.”

Earlier in the week, CIBC World Markets boosted their 2012 gold price forecast to $1,500 per ounce and raised its long-term forecast to from $1,000 to $1,200 per ounce. In a note to clients, CIBC stated that it anticipated an “influx of money” into the gold sector in the fall, noting the positive seasonality for gold during the months of September and November.

Both CIBC and TD reiterated their positive outlook for the gold producers, with both firms highlighting Barrick Gold (ABX), the world’s largest gold producer, as a way for investors to gain exposure to the gold price. Barrick Gold, as well as most of the large-cap gold companies, have failed to deliver this gold price leverage to their investors in recent years. Large CAPEX requirements, rising input costs, environmental permitting issues, and lower gold grades have all conspired to cause Barrick Gold and its peers to woefully underperform the gold price over the past few years.

Gold stocks have been mired in a long correction that dates back to December of 2009. The Market Vectors Gold Miners ETF (GDX) is 11% off its late 2009 high - despite the fact that gold price is a mere 2.1% lower over the same time frame. The GDX tested its December high in late June, rising to $54.83, but has since moved back under the $50 level.

Earnings season for the gold miners begins next week as Newmont Mining, Agnico-Eagle Mines (AEM), and Goldcorp (GG) all report second quarter results on Wednesday July 28 - followed by Barrick’s release on Thursday July 29. Investors are expecting strong numbers after a quarter that witnessed a gold price that averaged just under $1,200.