Donald Selkin, chief market strategist with National Securities, tells Minyanville that a Fed taper-triggered rise in interest rates, “could exert a negative influence on gold’s price.”
Gold, explains Selkin, has also lost its traditional safe-haven appeal “as it did not react in its usual positive way to the banking crisis in Cyprus, the ongoing civil war in Syria, and even the recent partial federal government shutdown here in the US.”
“This negativity toward gold has been reflected in the first annual decrease in exchange-traded products since trading in these instruments began in 2003,” he adds.
As government import controls also mean gold demand from India is not projected to increase by much next year and the rising costs of mining suggest no significant supply increase on the horizon, Selkin says he expects the gold price to average around $1,200 to $1,250/oz in 2014.
Last week, JPMorgan analysts lowered their gold forecast for next year to $1,263/oz as a result of tapering and low inflation in the US, they said in a research note via Marketwatch. Similarly, Barclays says it is expecting gold to average $1,350/oz in Q1 2014, falling to $1,270/oz by the end of next year, Reuters reports.
The Economist Intelligence Unit is forecasting an average gold price of $1,283.80/oz in 2014, and a slightly lower price in 2015.
However, a recent gold report by London’s Edison Investment Research argued that “far from tapering causing the gold price to fall, it will merely cause it to rise less quickly.”
Edison says the “interplay between interest rates and inflation” are key to the prospects for gold. The group says it calculates a long-term US dollar inflation rate of 10.7% under which it expects gold to average $1,511/oz in 2014 in a negative real interest rate situation. Edison expects a restoration of positive real interest rates to depress the price of gold, and in this scenario, forecasts a gold price of $1,434/oz next year.
As for the miners themselves, according to PwC’s recent gold, silver, and copper price report, they aren’t expecting the gold price to pick up in 2014 either -- only 47% of gold producers expect the price to increase in the next 12 months, compared to 88% last year.
Source: Minyanville
Gold, explains Selkin, has also lost its traditional safe-haven appeal “as it did not react in its usual positive way to the banking crisis in Cyprus, the ongoing civil war in Syria, and even the recent partial federal government shutdown here in the US.”
“This negativity toward gold has been reflected in the first annual decrease in exchange-traded products since trading in these instruments began in 2003,” he adds.
As government import controls also mean gold demand from India is not projected to increase by much next year and the rising costs of mining suggest no significant supply increase on the horizon, Selkin says he expects the gold price to average around $1,200 to $1,250/oz in 2014.
Last week, JPMorgan analysts lowered their gold forecast for next year to $1,263/oz as a result of tapering and low inflation in the US, they said in a research note via Marketwatch. Similarly, Barclays says it is expecting gold to average $1,350/oz in Q1 2014, falling to $1,270/oz by the end of next year, Reuters reports.
The Economist Intelligence Unit is forecasting an average gold price of $1,283.80/oz in 2014, and a slightly lower price in 2015.
However, a recent gold report by London’s Edison Investment Research argued that “far from tapering causing the gold price to fall, it will merely cause it to rise less quickly.”
Edison says the “interplay between interest rates and inflation” are key to the prospects for gold. The group says it calculates a long-term US dollar inflation rate of 10.7% under which it expects gold to average $1,511/oz in 2014 in a negative real interest rate situation. Edison expects a restoration of positive real interest rates to depress the price of gold, and in this scenario, forecasts a gold price of $1,434/oz next year.
As for the miners themselves, according to PwC’s recent gold, silver, and copper price report, they aren’t expecting the gold price to pick up in 2014 either -- only 47% of gold producers expect the price to increase in the next 12 months, compared to 88% last year.
Source: Minyanville
