Several analysts have recently cut their predictions for gold, providing dire forecasts for the future of the precious metal.
Individuals who want to make money by trading the commodity might benefit from being aware of this information. These market experts have lowered their predictions for gold at a time when the commodity has been having a rough 2013. The metal has suffered a precipitous slide that began earlier this year, and resulted in the precious metal falling into a bear market in April, after it plunged more than 20 percent from the all-time high that it rose to in 2011 amid significant economic turmoil.
In the following months, gold continued to trend lower. In June, it dropped below $1,200 per ounce, which represented its lowest price in almost three years. While the metal than managed to enjoy some appreciation and erase some of the losses it incurred, gold is still down sharply in 2013.
Markets predict further declines for gold
After the rough time that the commodity has had this year, several analysts have predicted that gold will continue to experience declines moving forward. Precious-metals strategists at UBS recently forecast that in 2014, the asset will have an average value of $1,200 an ounce, according to Barron’s. This amount compares to the prior forecast of $1,325 per ounce. In a report, two key market experts explained the various factors that will serve to push the precious metal lower next year.
Brian MacArthur and Joshua Wardell of the major financial services firm have asserted that the low risk aversion of global investors, “the reduction of tail risks” and a strong economy will all create a situation whereby “safe havens like gold will become even more unfashionable up ahead.”
Various factors could push metal lower
“With the market now increasingly refocusing on QE-tapering, gold has resumed its downward trend,” they wrote. “Together with weak underlying sentiment, as evidenced by the disappointing price performance even in the face of bad news such as tensions in Syria and the US government shutdown and given constrained Indian demand under the current regulatory framework, UBS believes the recent downward pressure will continue and sees a lack of supporting catalysts.”
UBS was not alone in making bearish predictions for the precious metal, as Societe Generale analysts recently recommended that global market participants “go short” on the commodity since they predict that there will be “more pain for gold, with prices seen at $1,050 an ounce by the end of 2014,” according to MarketWatch.
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