Gold is down $15 today to $1315 an ounce after a 10% rise in the period up to mid Februry 2014 – the best start to a year since 1983 as weak manufacturing data from the U.S. last week helped the metal have a 5% week on week gain. But several of the most accurate gold forecasters are still sticking with their bearish forecasts for this year.
Robin Bhar, the head of metals research at Societe Generale SA in London still predicting a price of $1050 an ounce by the end of the year. Justin Smirk, a senior economist at Westpac Banking Corp. Sydney and the second most-accurate forecaster tracked by Bloomberg in the past two years predicts a fourth-quarter 2014 average of $1,020. Jeffrey Currie, the head of commodities research in New York, said in a Feb. 12 report that his forecast for prices to was $1,050 by the end of the year.
Others are more bullish with Citigroup and UBS both saying that there’s about a 50 percent probability that gold has bottomed. Eugen Weinberg, the head of commodity research at Commerzbank AG in Frankfurt, said that gold could hit $1400 in a report at the end of Janaury.
The metal will average $1,165 an ounce in the fourth quarter, down 12 percent from $1,318.60 according to consensus forecasts.
Holdings in exchange traded funds backed by physical gold increased by 3.2 metric tonnes last week, the most since December 2012, after a 869 tonne drop in 2013. Investors added 1 tonne through gold exchange traded funds in February after cutting holdings for 13 consecutive months with the value of the funds’ assets climbing to $74.2 billion, from $67.9 billion at the end of 2013.
Hedge funds and other financial institututions more than doubled their bets on higher prices this year, with a net-long position of 69,291 futures and options contracts as of Feb. 11, from a six-year low of 26,774 on Dec. 3 (U.S. Commodity Futures Trading Commission). The record was 253,653 in August 2011 coinciding with the period around the all time high of over $1900 an ounce.
John Paulson, who cut his holding in the SPDR Gold Trust by 50 percent in the second quarter, maintained a 10.2 million-share stake valued at over $1.1 billion in the largest gold-backed ETP unchanged for a second straight quarter in the three months ended December 31st 2013.
Physical demand for gold appears to be rebounding after a dreadful 2013. Global gold demand fell by 15 per cent to a four-year low in 2013 as US investors sharply reduced holdings of the precious metal.
Chinese consumption increased 32 percent last year to record 1,065.8 tonnes making it the largest global buyer (overtaking India), with global bar and coin purchases climbing to an all-time high 1,654.1 tons. Indian usage rose 13 percent to 974.8 tons in 2013.
The World Gold Council, said in a report this week that demand in 2013 decreased to 3,756 tonnes. Demand between the three months to December dropped to 858 tonnes, down 29 per cent from a year earlier and the lowest since the second quarter of 2009. The data cover investor buying of coins, bars and exchange traded funds as well as central bank purchases and demand from the electronics and jewellery sectors. The net fall in demand is due to the sell-off by gold-backed ETFs, which last year led to disposals of 881 tonnes of bullion.
Looking at the various anaylst reports no one really knows the price of gold at the end of 2014 given the uncertainties around the strength of global growth, relative pricing of equities and the speed of Federal Reserve tapering. A range between $1100-1300 seems likely though.
Contrarian Investor UK
IMPORTANT: The posts I make are in no way meant as investment suggestions or recommendations to any visitors to the site. They are simply my views, personal reflections and analysis on the markets. Anyone who wishes to spread bet or buy stocks should rely on their own due diligence and common sense before placing any spread trade.
by contrarianuk
Bounce in gold price seen as short lived by many analysts
Feb 18, 2014 at 11:09 am in Market Commentary by contrarianuk
Gold is down $15 today to $1315 an ounce after a 10% rise in the period up to mid Februry 2014 – the best start to a year since 1983 as weak manufacturing data from the U.S. last week helped the metal have a 5% week on week gain. But several of the most accurate gold forecasters are still sticking with their bearish forecasts for this year.
Robin Bhar, the head of metals research at Societe Generale SA in London still predicting a price of $1050 an ounce by the end of the year. Justin Smirk, a senior economist at Westpac Banking Corp. Sydney and the second most-accurate forecaster tracked by Bloomberg in the past two years predicts a fourth-quarter 2014 average of $1,020. Jeffrey Currie, the head of commodities research in New York, said in a Feb. 12 report that his forecast for prices to was $1,050 by the end of the year.
Others are more bullish with Citigroup and UBS both saying that there’s about a 50 percent probability that gold has bottomed. Eugen Weinberg, the head of commodity research at Commerzbank AG in Frankfurt, said that gold could hit $1400 in a report at the end of Janaury.
The metal will average $1,165 an ounce in the fourth quarter, down 12 percent from $1,318.60 according to consensus forecasts.
Holdings in exchange traded funds backed by physical gold increased by 3.2 metric tonnes last week, the most since December 2012, after a 869 tonne drop in 2013. Investors added 1 tonne through gold exchange traded funds in February after cutting holdings for 13 consecutive months with the value of the funds’ assets climbing to $74.2 billion, from $67.9 billion at the end of 2013.
Hedge funds and other financial institututions more than doubled their bets on higher prices this year, with a net-long position of 69,291 futures and options contracts as of Feb. 11, from a six-year low of 26,774 on Dec. 3 (U.S. Commodity Futures Trading Commission). The record was 253,653 in August 2011 coinciding with the period around the all time high of over $1900 an ounce.
John Paulson, who cut his holding in the SPDR Gold Trust by 50 percent in the second quarter, maintained a 10.2 million-share stake valued at over $1.1 billion in the largest gold-backed ETP unchanged for a second straight quarter in the three months ended December 31st 2013.
Physical demand for gold appears to be rebounding after a dreadful 2013. Global gold demand fell by 15 per cent to a four-year low in 2013 as US investors sharply reduced holdings of the precious metal.
Chinese consumption increased 32 percent last year to record 1,065.8 tonnes making it the largest global buyer (overtaking India), with global bar and coin purchases climbing to an all-time high 1,654.1 tons. Indian usage rose 13 percent to 974.8 tons in 2013.
The World Gold Council, said in a report this week that demand in 2013 decreased to 3,756 tonnes. Demand between the three months to December dropped to 858 tonnes, down 29 per cent from a year earlier and the lowest since the second quarter of 2009. The data cover investor buying of coins, bars and exchange traded funds as well as central bank purchases and demand from the electronics and jewellery sectors. The net fall in demand is due to the sell-off by gold-backed ETFs, which last year led to disposals of 881 tonnes of bullion.
Looking at the various anaylst reports no one really knows the price of gold at the end of 2014 given the uncertainties around the strength of global growth, relative pricing of equities and the speed of Federal Reserve tapering. A range between $1100-1300 seems likely though.
Contrarian Investor UK
IMPORTANT: The posts I make are in no way meant as investment suggestions or recommendations to any visitors to the site. They are simply my views, personal reflections and analysis on the markets. Anyone who wishes to spread bet or buy stocks should rely on their own due diligence and common sense before placing any spread trade.