FE:Gold price to lose more gloss in 2014, India demand to contract: survey
GGold prices are likely to contract further in 2014, after tumbling for the first time in more than a decade this year with the case for bullion undone by confidence in a stabilising global economy, a metals consultancy said on Thursday.
In an update to its Gold Survey 2013, Thomson Reuters GFMS said the market could beat a retreat below $1,300 towards the end of 2014 as U.S. monetary stimulus is withdrawn, fuelling talk of rising interest rates.
The consultancy expects prices to average $1,350 next year, down 7 per cent from $1,446 in 2013, with support seen between $1,200 and $1,250.
RBI tightens gold import norms
Markets are widely tipping the U.S. Federal Reserve to start tapering its $85 billion monthly bond-buying as early as this month.
"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.
"And certainly one of the most important elements is that when they start talking about raising interest rates that is also likely to put some pressure on the market in terms of sentiment," she added.
The consultancy still held out for a positive start to next year, with geopolitical tensions and a possible breakdown in negotiations over the U.S. debt ceiling raising the possibility of a brief price rise to $1,500 in early 2014.
Gold demand improves as drop in price lures jewellers
Gold prices have fallen by around a fifth this year, hitting a three-year low in June of $1,180.71 an ounce, after the Fed signalled it would start tapering its bond-buying programme by the end of the year, with an aim to withdraw it by mid-2014.
Prices are currently around $1,360, some $540 below their September 2011 record high of $1,920.30 an ounce.
PHYSICAL DEMAND FADES
GFMS remained cautious on physical demand growth, saying that exceptional levels seen in the first half were unlikely to be replicated in the coming months as inventories in traditional buying strongholds China and India had been replenished.
