In spite of growing market speculation that the decade-long bull run for gold could be over, Thomson Reuters GFMS is confident that the metal will “average an all-time high over the first half of 2013” and “recover back well into the $1800s”.
Speaking at the launch ofThomson Reuters GFMS Gold Survey 2012 – Update 2 yesterday, Philip Klapwijk, global head of metals analytics for the consultancy, said that despite the sell-off in the fourth quarter of last year, many of the factors that have underpinned gold’s bull run to-date remain in place and will return to the fore this year.
“Although there is now growing speculation around the structure and longevity of the Fed’s QE program, policies of ultra-low interest rates across the western economies will persist in 2013,” he said.
“This will continue to support investor interest in gold in the absence of low-risk investments that can offer acceptable yields.”
He said world investment in gold is forecast to rise by just over 20 percent in volume terms and almost 30 cent in value terms in the first half of 2013 in comparison to the first half of 2012.
“The key drivers of this inflow into gold in 2012 … are similar to those expected to push the price higher this year, namely concerns over economic growth in the major economies, its impact on central banks’ monetary policies, and investor worry over sovereign debt levels.”
Klapwijk concluded that investors remained largely pro-gold in 2012 due to the boost given to their confidence by ongoing central bank buying of the metal.
“Demand in this segment of the market was again driven by several central banks’ actions to moderate exposure to the major currencies, particularly in light of ongoing loose monetary policies and last year’s escalating sovereign debt concerns and we expect that large net purchases by the official sector will continue this year.”