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Top Gold Forecasters Provide 2013 Outlook

Release Date: 
Wednesday, January 16, 2013

The price of gold fell on profit taking.  Gold was $3.20 lower at 6:53 a.m. Pacific Time on the New York Spot Market, trading at $1,677.70 per ounce.  Spot silver was $0.12 lower at $31.35 per ounce.  (Click here for the most current spot prices.)

Gold may climb toward $1,900 per ounce and average a record high in the first half of 2013 as central bank policies boost investor demand, according to Thomson-Reuters GFMS. “Although there is now growing speculation around the structure and longevity of the Fed’s quantitative-easing program, policies of ultra-low interest rates across the western economies will persist in 2013,” said Philip Klapwijk, global head of metals analytics at GFMS and Goldline newsletter contributor. “This will continue to support investor interest in gold in the absence of low-risk investments that can offer acceptable yields.”

Central bank purchases increased 17 percent last year and GFMS estimates new purchases will increase by 1.2 percent.  Purchases were “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,” Klapwijk said.

Analyst Tom Kendall at Credit Suisse expects gold may average $1,740 this year while Jochen Hitzfeld of UniCredit in Munich predicts $1,700.  According to Bloomberg, the analysts comprise two of the top three most accurate gold price forecasters.  Kendall said gold may average $1,720 per ounce in 2014 while Hitzfeld expects gold may average $1,800 per ounce.

“The most important factor is negative real interest rates and we see no end in sight there for the next couple of years,” said Hitzfeld. “What is dangerous is if key interest rates rise the above inflation rate, but this isn’t anywhere in sight.”

“Gold’s still going to have a very solid role as a diversifier in portfolios,” said Kendall. “It’s the more shorter-term speculative investors who are going to gradually drift away from gold.”

Thorsten Polleit, Frankfurt-based chief economist at Degussa, expects gold may reach $2,070 per ounce this year on the view that governments are printing increasingly greater sums of money.

(Sources:  “GFMS Sees Gold Climbing Toward $1,900 on Central-Bank Stimulus,” Bloomberg, January 16, 2013; “Gold Falls After Rally to Two-Week High Curbs Investor Demand,” Bloomberg, January 16, 2013; “Gold Forecasters Splitting on Peak for Bull Market: Commodities,” Bloomberg, January 15, 2013; “Germany wants its gold back; platinum pops,” Marketwatch, January 15, 2013)

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†This material has been prepared for private use. Although the information in this commentary has been obtained from sources believed to be reliable, Goldline does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice.

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