29 December 2013, 09:46

Gold price forecast for 2014

Gold price forecast for 2014

According to a recent Gold Survey published by Thomson Reuters GFMS the price for gold is expected to fall, due to rising interest rates and the expected withdrawal of monetary stimulus programs. But what happens if the stimulus isn't withdrawn?

The average price predicted by market participants surveyed by Reuters is $1,350 per ounce which is 7% less then the average price of 2013 but $150 more than the current spot price."Although the Fed tapering has been priced in already by the gold market, that is not to say that you won't be getting a bit of a wobble as of when it is announced," Rhona O'Connell, head of metals research and forecasting said.

The biggest gold bear of all the big international banks is Goldman Sachs. The bank predicts that the price will fall at least 15 percent from current levels. Using Friday's spot price, this forecast predicts that the price will be $1,411 per ounce. However, it should be taken into account that Goldman's commodity forecasts have been notoriously inaccurate in the last several years.

The most optimistic forecast for gold comes from Australia and New Zealand Banking Group Limited (ANZ), the third largest bank by market capitalization in Australia. ANZ predicts an average price of $1,450 per ounce. The bank bets Chinese and Indian demand for gold coins and jewelry. In China and India, gold is traditionally used as an inflation hedge and the demand for gold in Asia has been steadily increasing during the last five years.

SAXO Bank's head of equity strategy, Peter Garnry advises his clients to keep away from gold mining stocks, but the stocks of mining companies have performed even worse than the metal itself. He told City AM that "gold prices will continue to fall and the leveraged gold miners will likely disappoint again".

It seems that the general consensus is that gold will be a bad investment in 2014. However, investors should be aware that the best opportunities for buying assets sometimes present themselves when everyone is selling.

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