Gold should reach the mid-US$1800s by the end of the year, according to Thomson Reuters GFMS Gold Survey 2013.
Launching the annual survey last week, Neil Meader, head of Thomson Reuters GFMS precious metals research & forecasts, said the company anticipates that US developments will remain a key factor driving gold price movements over the course of 2013.
“Whilst improved if still patchy economic data contributed to a softening of the gold price in recent months, the consultancy feels that the related negative overspill for gold is already priced into the market and more importantly that there is a continued lack of confidence that ongoing debate, most immediately relating to budget cuts and further raising the debt ceiling, will smoothly arrive at satisfactory and timely resolution,” he said.
In addition “gold is likely to remain very sensitive to US monetary policy, and even though we’ve had some hawkish noise from some within the Fed, it’s difficult to see a material unwinding of the QE program until well into 2014 and so that should continue to underpin the gold price in 2013”.
The GFMS report also predicts that the gold price will rise due to “ongoing support from events in Europe… as there remains significant potential for gold-friendly shocks, as evidenced by the price uplift seen in mid-March on the back of the situation unfolding in Cyprus” as well as “the maintenance of a low-interest rate environment and some investors’ fears over the potential for inflation to become resurgent”.
GFMS did however inject some caution in its predictions, with Meader concluding that “there’s arguably clearer light at the end of the tunnel in that we can perceive a return to something morelike normality for the macro-economic backdrop, and that could easily entail the start of a secular bear market, perhaps in late 2013 or more probably in 2014”.