From the SMH blog:
The two most-accurate gold forecasters are holding to their bearish forecasts for 2014 even after the metal posted its best start to a year since 1983.
‘‘I just see this as a corrective move,’’ says Robin Bhar, the head of metals research at Societe Generale in London and the most-accurate forecaster tracked by Bloomberg in the past two years. ‘‘We would still want to be bearish gold.’’
Bhar who expects a fourth-quarter average of $US1050.
Bullion got a boost this year from reports showing the US wasn’t growing as fast as forecast and as lower prices spurred Asian demand, with coin sales rising from America to Australia. Spot gold is down 0.7 per cent today at $US1322 an ounce, but still up a strong 10 per cent since the beginning of the year.
Gold’s best forecasters say the rebound won’t last because higher prices will stifle purchases and the Federal Reserve will continue slowing stimulus as the economy strengthens.
Even after gold dropped 31 per cent from a record $US1923.70 in September 2011, prices are twice the average of 2006.
‘‘Haven demand plays well when gold is cheap, but it’s no longer cheap,’’ says Justin Smirk, a senior economist in Sydney at Westpac and the second most-accurate forecaster tracked by Bloomberg in the past two years. ‘‘I’m a little surprised by the volatility in the market, but it really doesn’t change my overall view,’’ says Smirk, who expects a slide through the year to a fourth-quarter average of $US1020.
I don’t think higher prices matter much vis. physical demand. It’s the ETF market and whether it’s buying or liquidating that determines the gold price these days. That’s why it’s become such a simple market. QE slows, gold goes up. Taper proceeds, gold goes down. It’s become a pure hedge to developed economy growth prospects around investor perception of the effects of QE.
These chaps therefore represent as much a consensus about US growth as they do the gold market. I’m a bit on the fence on this one. I reckon the US will have a better year as austerity fades but not as good cheerleaders reckon and therefore have an open question about taper proceeding smoothly.
But I can’t say I embrace either view with conviction.
