SF: Gold Bulls Retreat as Goldman Sees Peak Next Year: Commodities
Dec. 7 (Bloomberg) -- Gold traders are the least bullish in seven weeks as Goldman Sachs Group Inc. said the metal’s longest winning streak in at least nine decades will peak next year amid accelerating U.S. growth.
Fourteen of 31 analysts surveyed by Bloomberg expect prices to rise next week and 10 were bearish. A further seven were neutral, making the proportion of bulls the lowest since Oct. 19. Goldman lowered its 12-month estimate by 7 percent to $1,800 an ounce on Dec. 5 and said the metal would average $1,750 in 2014. Morgan Stanley said yesterday bullion will be among next year’s best-performing commodities.
Investors from John Paulson to George Soros are holding a $143.3 billion bet through record holdings in bullion-backed exchange-traded products as central banks from the U.S. to China pledge more steps to spur economic growth. While gold is headed for a 12th consecutive annual gain, it has failed to reach a new record this year for the first time since 2007. Global economic expansion will accelerate to 3.6 percent in 2013, from 3.3 percent this year, the International Monetary Fund estimates.
“Gold remains in the middle of a superstorm, but it’s not the perfect storm,” said Filip Petersson, an analyst at SEB AB in Stockholm. “It’s not the time to short gold but on the other hand it is not very appealing either. If the global recovery picks up pace without inflation the game is over for gold.”
Gold Price
Gold rose 8.5 percent to $1,696.96 in London this year, reaching a four-week low on Dec. 5. The Standard & Poor’s GSCI gauge of 24 commodities lost 1.6 percent since the beginning of January and the MSCI All-Country World Index of equities climbed 11 percent. Treasuries returned 2.8 percent, a Bank of America Corp. index shows.
The Federal Reserve said Oct. 24 it will maintain $40 billion in monthly purchases of mortgage debt and probably hold interest rates near zero until mid-2015. Gold rose 70 percent as the Fed bought $2.3 trillion of debt in two rounds of monetary easing from December 2008 through June 2011. Prices will average $1,853 in 2013, 11 percent more than this year’s average, Morgan Stanley estimates, citing a weaker dollar, low interest rates and purchases by central banks.
Investors buying bullion as a hedge against inflation and a weaker dollar generally earn returns only through price gains, increasing its allure as interest rates decline. The U.S. Dollar Index, a measure against six currencies, reached a six-week low two days ago. U.S. Mint sales of American Eagle gold coins more than doubled in November to 136,500 ounces, the most since July 2010, data on its website show.
ETP Holdings
Metal held through ETPs increased every year since 2003, when the first product was listed, and reached a record 2,627.6 metric tons Dec. 5, equal to almost a year of mine production, according to data compiled by Bloomberg. Soros Fund Management LLC raised its stake in the SPDR Gold Trust, the biggest gold ETP, by 49 percent in the third quarter and Paulson & Co. maintained the largest holding now valued at $3.59 billion, U.S. Securities and Exchange Commission filings show.
Gold will peak next year even as the Fed expands stimulus, according to Goldman, which expects a price of $1,825 in three months. It may drop to $1,625 by the end of 2014 without additional Fed easing or $1,500 if U.S. growth is better than expected, the bank said. America’s expansion will slow this quarter before accelerating in the next four, the median of as many as 73 economist estimates compiled by Bloomberg show.
While BNP Paribas SA expects central-bank stimulus to help gold set a new record next year, the bank cut its 2013 forecast for average prices by 1.8 percent yesterday to $1,865 and predicts $1,780 in 2014. That would be the first drop in average annual prices in more than a decade.
