If 2013 will go down as the year gold lost its glitter, 2014 may be remembered as the era it recovered some sparkle, yet it remained dull. This seems to be the main conclusion of some of the most followed gold forecasters, such as Goldman Sachs, J.P. Morgan and Morgan Stanley, among others.
Goldman Sachs is predicting a “significant decline” of at least 15% this year. And analysts at J.P. Morgan lowered their forecasts on gold prices by 10% to $1,263 an ounce for 2014 and by 12%to $1,275 for 2015, according to their research note.
Morgan Stanley did not offer an alternative view. The investment bank expects gold to extend losses this year, to average $ 1,313 an ounce.
Jeff Rhodes, founder and managing consultant for Rhodes Precious Metals Consultancy DMCC in Dubai, is the only one that seems slightly optimist. He told Al Arabiya that he expected 2014 to be “a year of consolidation and modest recovery” in the gold market.
TheGoldForecast analyst, Gary Wagner, partially agrees. In a recent interview with Kitco News he said gold's double bottom of $1,180 could be revisited this year, despite the metal's significant bounce back. Wagner added the wildcard for the gold market in the first months of 2014 is the Fed and Janet Yellen taking office by the end of January.
Wagner acknowledges that certain market factors may boost bullion prices. “Chinese demand for physical gold imports will probably grow strongly this year, and India’s import restrictions on the metal cannot go on forever. But these facts were just as obvious in 2013 and the market still went downhill on gold,” he was quoted as saying.
As FT.com columnist Gregory Meyer wrote a few weeks ago, the lesson seems to be that it’s possible to get the context right and still get the price dead wrong.