Even though gold has enjoyed more than 10 consecutive years of price gains, several market experts predicted recently that the precious metal will depreciate in the near future.
Forecasts such as this could prove beneficial to any individuals who want to make money trading gold.
While there have been many predictions for what the price of gold will do, one that has managed to generate visibility recently is a forecast from Citi analysts that the metal will depreciate to less than $1,250 per ounce before 2013 is over, according to MarketWatch.
These individuals also projected that the metal will have an average price of $1,250 an ounce in 2014.
The analysts who wrote the note cited several variables to back up their prediction, Barron’s reported. They emphasized the tapering of quantitative easing that everyone expects will happen in the near future. In addition, the market experts projected that the emergence of increasingly stronger economic data will push gold prices lower. The analysts also asserted that while the price of the metal has enjoyed a rally lately, this general uptrend will not last forever.
“Our expectation is that the postponement of the tapering decision by the [Federal Open Market Committee] represents only a short-term reprieve for gold,” they wrote in the note, according to the news source. “U.S. unemployment continues to grind closer to the Fed target level, with the current reading at 7.3 [percent], although concerns remain that labor force participation is weak and the Fed has indicated ongoing support for low rates at the front-end for the next several years.”
While the forecast that Citi made might seem bearish, individuals who want to make money by trading gold might be interested to know that Jeffrey Currie, head of commodities research for Goldman Sachs, stated in a recent interview that the price of the metal could fall below $1,000 per ounce in the near future, MarketWatch reported.
Like the analysts at Citi, Currie also noted the importance of both economic data and also the bond purchases made by the Federal Reserve, according to the news source. He stated that once the information about the strength of the nation’s economy – such as data related to the jobs market – is released, gold selling will surge.
“While we agree with the mid-cycle price somewhere around $1,200, we believe that at least near term it can overshoot to the downside, which is why we have $1,050″ as a target price, he stated, the media outlet reported. “It clearly could trade below $1,000.”
Another major financial services firm that recently predicted declines in the price of gold was Morgan Stanley, according to MarketWatch. This firm projected that next year, bullion will have an average value of between $1,200 and $1,350 an ounce and then decline after that.
“While any further postponement would likely continue to benefit gold prices in the near term, we still think it is just delaying the inevitable,” Peter Richardson and other analysts at Morgan Stanley wrote in a note, the media outlet reported. “The longer-term narrative for gold remains in place – waning investor appetite for a risk and inflation hedge, challenged physical demand and a rising USD.”
These predictions were made after the precious metal experienced twelve consecutive years of gains and rose to more than $1,900 per ounce late in 2011. Gold has managed to draw substantial visibility over this period, and many have thought of it as a safe haven from economic turmoil.
In 2013, gold has experienced sharp enough depreciation to fall into a bear market in April and then move into a bull market in August. Even after its recent recovery, the price of the metal is sharply lower for the year.
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