Analysts say gold could get even uglier
The metal isn't so precious anymore, with Bank of America Merrill Lynch slashing its forecast by 11%.
In one of the first, if not the first, calls on gold this year, Bank of America Merrill Lynch slashed its average 2014 forecast for the shiny stuff by 11% to $1,150 an ounce on Thursday, with a warning it could get even uglier.
Gold plunged 28% in 2013 to just above $1,200, snapping a 12-year annual winning streak and recording its worst annual performance in nearly three decades.
Silver, which also didn’t escape the chop from Bank of America Merrill Lynch, suffered a 36% loss in 2013, its worst since at least the early 1980s. The investment bank cut its forecast for silver by 21% to $18.38 an ounce.
On Nov. 26, the bank forecast gold for 2014 at $1,294 an ounce, and silver at $26.38 an ounce. (Check out some other calls that MarketWatch rounded up at the year end.)
Strategist Michael Widmer said his biggest gold worry is a lack of buyer interest, as investors have been a marginal driver of prices in recent years. A gain of around 2% so far this year hasn't really convinced him either.
"If investors stopped selling gold, prices could stabilize around $1,200/oz. Yet, this is not our base case and a more likely scenario is for investors to continue reducing their exposure. Our model suggest that this could take prices down to $1,000/oz."
He adds that not even traditional buying of physical gold in India and China will be enough to keep prices from falling.
Of course, this Merrill call perhaps pales in comparison to blogger Robert Bonomo, who predicted gold will break below $960 an ounce, blaming the likes of MarketWatch and a few others. (h/t Need to Know.)
But gold bugs can cheer up somewhat, as all is not uber-gloomy at BofA Merrill.
Widmer says prices for gold could bottom out later this year. He reasons that a continued acceleration in the U.S. economy, tightening labor market and slowly rising inflation could trigger gold market players to increasingly adjust low inflation expectations, pricing in some unexpected inflation and luring back buyers.
The bottom line: Investors could see some "interesting entry points" for gold this year, he says.
Still from the "gold is pretty doomed camp," Wednesday's fairly hawkish set of minutes from the Fed's December taper meeting was hardly a boon for gold, says Daily FX's Ilya Spivak. Watch out, he says, for Thursday's report on weekly jobless claims to drop to the lowest in five weeks (which it did), boosting the dollar and further eroding that anti-fiat demand for gold. Bigger jobs data lay in wait on Friday.
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A couple of years ago a guy named "bobster" kept posting here that he was 100% in gold, that equities/bonds sucked, and the rest of us should sell any stocks or bonds that we had and put everything in gold like he did, and if we didn't listen to him, then we were all morons........I haven't seen a post from bobster in quite a while. I mentioned this to explain a post I have frequently made in the past: There are no experts, only those who think they are.
say what you will, inflation will likely return with a vengeance and gold prices will return to the $2,000 oz. level over the next 4 to 8 years. who doesn't need an asset class with a 100% return? that said, we have portfolio exposure at no more than 5% due to the short-term volatility ...
patience, patience ....
If you like your gold, you can keep your gold...oh, wait, just another obama lie.
REMEMBER BENGHAZI 2014 & 2016!!!
If the price of gold goes down that's great news. That just means I'll be able to buy more before the price skyrockets again for good.
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The solid report comes a month after the retailer closed all of its Canadian operations.
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