Gold exchange traded funds have traded in a range the past couple weeks as prices hover just below $1,800 an ounce, but Goldman Sachs recommends investors stay long the precious metal.

“We expect gold prices to continue to climb in 2011 given the current low level of U.S. real interest rates. Further, with our U.S. economics team now forecasting slower U.S. economic growth in 2011 and 2012, we expect U.S. real interest rates to remain lower for longer, supporting higher gold prices through 2012,” Goldman Sachs said in a note. Goldman said it was maintaining a long position in gold.

SPDR Gold Shares (NYSEArca: GLD), an ETF with over $70 billion in assets, was down fractionally on Monday as the dollar strengthened, but the precious metal fund is up about 25% year to date on Europe’s debt crisis and fears of further currency debasement. There was bullish call buying last week in options based on the ETF “as investors seem to be poised for additional upside in gold,” said Paul Weisbruch, head of ETF/options sales and trading at Street One Financial.

Yet gold’s recent behavior has frustrated some investors because the metal, a traditional safe haven, has at times fallen with other risky assets such as stocks, The Wall Street Journal reported. “Indeed, some significant shocks to financial markets have encouraged investors to sell gold to maintain their cash cushion and cover margin commitments,” the article noted.

“This relationship with equities appears to be more ensconced when there is a widespread need to raise cash. But that should be only likely to happen when equity-market losses are at their most severe,” HSBC chief commodities analyst James Steel said in the WSJ story. And even when gold falls in tandem with risk assets, “it doesn’t mean investors have given up on gold. It just means the currency markets are trumping gold’s safe-haven qualities.”

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