Despair not, gold investors. Goldman Sachs hasn't given up on bullion.
Despite a significant selloff in the yellow metal in recent days, bottoming out at four-month lows, Goldman Sachs is still forecasting a rally in gold this year.
Bloomberg reports the global investment house saying the precious metal will move to $1840/oz over the next six months after the U.S. central bank embarks on a third round of stimulus in June.
Renewed turmoil in Europe this week, especially Greece where recent elections have cast doubt on a bailout package contingent on austerity measures, saw investors flock to the relative safety of the US dollar, which rose against falls in the prices of commodities including precious metals, base metals and oil.
But analysts quoted by Bloomberg noted it is "too early for the dollar to claim this status" as a safe haven compared to gold:
“The case for higher gold prices remains in place,” the analysts wrote. “U.S. economic and employment data has now disappointed for several weeks, European election results point to further stress in the euro area, while anecdotal data suggests that physical gold demand remains resilient.”
Meanwhile the Globe and Mail addressed investor frustration of lagging gold equities in a story focusing around Kinross Gold, whose share price has been slaughtered this year after being forced to write down $2.5 billion of its Tasiast gold deposit in Mauritania due to soaring costs and changing project parameters:
Kinross shares are down 60 per cent in the past eight months.Barrick Gold Corp.(ABX-T37.840.190.50%), the world’s biggest producer, has seen its stock sink 34 per cent since September, while smaller rivals such as Yamana Gold Inc.(YRI-T13.830.080.58%) andIamgold Corp.(IMG-T10.900.100.93%) have suffered declines of 27 per cent and 55 per cent respectively from their 52-week highs.
“There is nothing more frustrating than being right on the general theme, but actually not making any money for investors,” said Adrian Day, who runs a boutique asset management firm under his own name.