Surprise! Analysts are bearish on gold December 3, 2013, 12:37 PM
After a drop of roughly 27% in gold futures prices GCG4 +2.02% year-to-date, analysts have grown increasingly bearish on the precious metal, much to the dismay of so-called gold bugs.
UBS analysts on Tuesday cut their average gold price forecast for 2014 to $1,200 from $1,325 an ounce.
“The struggle for gold not only rests with the predominant selling interest amongst investors currently, but with limited positive catalysts looking forward; gold is unlikely to regain its former appeal,” the analysts said.
Also in a recent report, Societe Generale analysts told investors to “go short” on gold because there’s “more pain for gold, with prices seen at $1,050 an ounce by the end of 2014.”
But the bearish tones from analysts shouldn’t come as too much of a surprise. The metal has actually “lived up to the bearish predictions,” said Brien Lundin, editor of Gold Newsletter.
UBS already lowered some of its short-term gold price targets about a week ago.
Also in late November, hedge-fund billionaire John Paulson told clients that he won’t invest any more of his own money in his gold fund because he isn’t sure when inflation will accelerate.
In mid-November the World Gold Council reported that physical demand for gold in the third quarter fell 21% from the same time a year ago.
And against that backdrop of falling gold prices, metals-mining shares have taken even bigger hits.
The Philadelphia Gold and Silver XAU +2.82% and the NYSE Arca Gold BUGS XX:HUI +2.24% indexes have each lost more than half their value year-to-date, while the Market Vectors Gold Miners exchange-traded fund GDX +3.33% has dropped 55% this year and is trading at its lowest level in five years.
Still, on a more upbeat note, analysts at the Tiberius Group said gold and silver should gradually emerge from their respective bear trends in 2014.
“Bearish, commodity-specific factors” such as physical surpluses, producer hedging and outflows from exchange-traded funds “should be counteracted by a slew of bullish macro factors,” such as no interest rate turnaround in sight, negative-to-neutral real rates and high public debt ratios, they said in a report emailed Tuesday.
So “long-horizon buyers are likely to take advantage of lower prices to re-enter the market,” they said.
As the market heads into 2014, the Tiberius analysts said they expect prices for gold to drift lower at first “until the transfer from weak hands to strong hands is complete.” Then by the end of 2014, prices should have recovered to anywhere from $1,200 to $1,250 an ounce. Gold futures closed at $1,221.90 on Monday.
The above illustrates just how strong a position GOLD is actually in, with virtually everyone calling for lower prices, or at least very little chance of rallying.....
and this is happening without the $1180 area being broken......
Of course, NCM has other problems, however a Higher Gold price and lower AUD will eliminate most of them.......
NCM Price at posting:
$7.16 Sentiment: Buy Disclosure: Held
