Bullion will average $1,250 this quarter, dropping to $1,225 in the first three months of 2014 and $1,195 in the following period, the Bloomberg survey showed. The most-accurate list includes the top five overall forecasters of precious metals, and the remaining five are made up of the best analysts for gold, silver, platinum and palladium individually.
Jeffrey Currie, Goldman Sachs Group Inc.’s head of commodities research who correctly forecast this year’s rout, said Oct. 8 that gold is a “slam dunk” sell for next year because the U.S. economy will strengthen after lawmakers resolve the stalemates over the budget and debt ceiling. Goldman expects prices to be at $1,050 at the end of 2014.
Gold rose 70% from December 2008 to June 2011 as the Fed pumped more than $2 trillion into the financial system, increasing concern about currency debasement and inflation. Consumer-price gains averaged 2.2% the past two years, compared with a 10-year average of 2.4%. The S&P 500 index is trading 0.5% below the record set Sept. 19.
There are still risks the global recovery will be weaker than expected, with the International Monetary Fund cutting its 2014 growth outlook on Oct. 8 to 3.6% from 3.8%. China will expand 7.4% next year, the least since 1990, and the 17-nation euro area will grow 1% after contracting since the start of 2012, according to economist estimates compiled by Bloomberg.
Demand for physical gold may also curb the decline in prices anticipated in the Bloomberg survey. The metal jumped as much as 21% in two months after reaching a 34-month low of $1,180.50 on June 28 as Asian demand for jewelry, bars and coins surged. Global sales of bullion bars and coins gained 78% to a record in the second quarter, according to the London-based World Gold Council.
“If we saw any big downside moves then you would get a surge in Chinese buying,” said David Wilson, an analyst at Citigroup Inc. in London. “People are buying gold not just for investment. The jewelry market is growing rapidly and I suspect people will bargain hunt.”