The worst is not over: Gold to hit four-year low, forecasters say
Gold will reach a four-year low over the next four quarters according to the most accurate forecasters.
Bloomberg reports that estimates from the 10 most accurate precious metals analysts say the metal will drop to an average of $1,175 per ounce in Q3 2014. The current price is $1,321.
Forecasters say that eventual easing of US stimulus measures will drive down demand for gold as a safe-haven.
The price more than doubled since the global financial crisis in 2008 but has seen some sharp falls this year as the US Federal Reserve contemplates tightening monetary policy.
According to Bloomberg, gold-backed funds lost $63 billion of their value this year.
“Desire to buy gold as a hedge against the consequences of monetary policy has diminished,” Tom Kendall, an analyst at Credit Suisse Group AG, told Bloomberg. “When you’ve got other asset classes, equities in particular, doing so well, then it’s hard to divert investments out of them and into something like gold, which is falling.”
Price movement during the US government shutdown has eroded confidence in bullion as well. The economic uncertainty should have been a boost for safe-haven buying but the gold price fell sharply during the shutdown – although it has regained most of these losses.
See also: Rick Rule: Are gold critics right?