Breaking News

Gold Likely To Reach 4-Year Low In 2014

By Commodity Trade Mantra CommoditiesMay 08, 2014 12:55PM ET
Gold Likely To Reach 4-Year Low In 2014
By Commodity Trade Mantra   |  May 08, 2014 12:55PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items

Gold prices have probably peaked this year and could sink to their lowest since 2010 at $1,100 an ounce as the U.S. economic recovery gathers pace, consultancy Metals Focus said on Wednesday.

Weakness is likely to set in after an impressive start to the year, it said, when gold rallied to six-month highs. But a replay of last year’s 28 percent plunge, triggered by the U.S. Federal Reserve’s tapering of extraordinary stimulus measures, is not on the cards.

The consultancy also forecast that an eventual easing of tensions in Ukraine would add to a bearish trajectory for the market.

“In the short term, the U.S. recovery regaining momentum (thanks to improving weather conditions) and the eventual de-escalation in Ukraine are likely catalysts for lower prices,” it said in its Gold and Silver Mining Focus 2014.

“Meanwhile, the Fed’s ongoing reduction in its bond purchases, easing concerns about fiscal situations on both sides of the Atlantic and low inflation are all headwinds for the yellow metal for the rest of 2014.”

Robust demand from the major physical gold markets in Asia should help offset Western investors’ lingering caution in gold futures, derivatives and exchange-traded funds.

Chinese demand, which surged last year as prices fell, will remain strong, it said, though below the 2013 level. That, along with strength in retail demand in Western markets, helped drive a 35 percent surge in physical investment last year to 47.1 million ounces.

Jewellery consumption also rose 22 percent to 81.7 million ounces, while the volume of scrap gold returned to the market fell 26 percent to 39.3 million ounces.

That helped offset a 5 percent rise in output from gold mines to 96.7 million ounces, resulting in a 21.8 tonne structural deficit in the market last year, Metals Focus said.

That does not include outflows from bullion-backed exchange-traded funds (ETFs), however, which according to Reuters data totalled 26.354 million ounces last year. The strength of ETF outflows was a major weight on prices in 2013.

“Given plenty of above-ground inventory, other than a temporary shortage of kilobars in Q2, the gold market remained well supplied last year,” Metals Focus said. “Moreover, it is of note that ‘Western’ investors tend to set the price, while physical markets react to it.”

The consultancy expects silver prices to average just under $20 an ounce this year, not far from current levels but well below last year’s average of around $23.80 an ounce, as its fundamentals weaken.

“Global supply is expected to rise by around 2 percent, compared with a 4 percent drop in world silver demand,” it said. “The most significant change … is expected in physical investment, which is forecast to drop 11 percent.”

Source: Reuters
Gold Likely To Reach 4-Year Low In 2014
Gold Likely To Reach 4-Year Low In 2014

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Are you sure you want to delete this chart?
Write your thoughts here
Replace the attached chart with a new chart ?
Post also to:
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Post 1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email