Goldman Sachs gold forecast for 2013, 2014 is in a good agreement with
I Know First algorithmic system
Warren Buffett, Chairman of Berkshire Hathaway, expressed similar reservations about gold as an investment:“When we took over Berkshire, it was selling at $15 a share and gold was selling at $20 an ounce. Gold is now $1600 and Berkshire is $153,500
Gold hasn't been this deep in the buy zone since early 2005 as CFTC data show a massive exit of large speculator net long positions. What this says about the long-term trend is a question of debate, but it's probably not the worst short-run indicator.
GLD +0.9% premarket, continuing a minor bounce since the metal fell below $1,200/ounce last week.
Credit Suisse's Tom Kendall told CNBC on Monday:
"You need to re-examine your expectations for the gold market if you're long -- you need to stop thinking in terms of crisis and start thinking about where gold was pre-crisis,"
Rising physical demand for gold is "price responsive, and not price setting," says Goldman, remaining bearish on the yellow metal.
Improving economic activity, less accommodative monetary policy, and higher real rates are the driving factors and they all say gold is headed lower, perhaps nearing triple digits by the end of next year.
Goldman Sachs GS today cut its outlook on gold prices for this year and next, citing growing price risks from a brightening U.S. economic picture.
The bank now expects gold to end this year at $1,300 a troy ounce, down 9.4% on its previous forecast. It sees gold ending 2014 at $1,050 an ounce, down 17.3% on its earlier outlook.
After settling Nymex trade at $1,286.20 an ounce — the lowest close since September 2010 — August gold took further damage on news that exchange operator CME Group Inc. CME -1.53% was hiking margin requirements.
The CME, which owns the Nymex’s metals-trading Comex division, said following Thursday’s close that it would hike initial and maintenance margins for gold by 25%, according to reports.
Gold bulls may take comfort as Dennis Gartman jumps on the bearish bandwagon, calling the metal an "aging athlete" and "a broken commodity." The man who loved "stuff that hurts when you drop it on your foot" 2 years ago says the price is headed to $1K if $1.2K support is broken. HSBC's James Steel disagrees, seeing strong physical demand lifting the price to $1.6K in H2 and $2K in the longer term.
The Federal Open Market Committee, the Fed’s interest-rating setting body, is due to begin its meeting Tuesday and release its policy decision Wednesday. Bernanke is also scheduled to hold a news conference on Wednesday.
But T. Rowe Price said it believes the Fed is on track to begin reducing the pace of asset purchases during the summer quarter.
“The labor market outlook has improved since the program’s inception in September, downside risks in the economic outlook have diminished, and a revival in consumer credit-card footings is among reasons to have greater confidence in forecasts of a gradually improving growth profile,” T. Rowe Price chief economist Alan Levenson said in a report late last week.
The dollar had spent most of Thursday’s session below ¥95 yen — even briefly stepping below ¥94 to hit its lowest level in two months.
For the week, the dollar was down about 2.5% against the yen, on track for a fourth straight week of declines.
The dollar in mid-May had charged up to ¥103, or a 4-1/2-year high, in the wake of the Bank of Japan’s April launch of monetary measures to stimulate economic growth and concerns the Federal Reserve might soon pare its bond-buying.
But investors subsequently started unwinding bets that the yen would fall, in part due to a sharp retreat for Japanese equities.
You still have time to short gold:
Betting against bubbles, and its inverse, catching falling knives, are great ways to severely compromise your net worth. A bubble must show real signs of popping before it would be advisable to bet against it. This year, the gold market has shown all signs of bursting. We may be witnessing a perfect storm of events that will continue to precipitate gold's decline in value. Equity markets are outperforming, and rampant inflation is nowhere in sight, even with competitive devaluation and a race to the bottom from the worlds' central banks.