gold in 2014

Deutsche Bank just a week ago forecast gold falling away to $US1100 an ounce and its latest report argues all the factors supporting gold's price over recent times will fade in 2014. Yet gold bugs will actually feel quite buoyed by looking past this headline. In spite of their hunch that gold will weaken significantly, the Deutsche team makes the following points:

lIt looks like China will keep buying gold, with Beijing backing gold trading. Swiss gold refiners have been converting 400oz bars favoured by exchange-traded funds into 1kg bars to be shipped to China. The report notes: "With China gaining greater dominance in the gold market, one should not underestimate the possibility that gold may eventually break its correlation with US indicators and tie itself to Chinese indicators."

lGold coin demand remains strong. Austria's Muenze Oesterreich mint saw sales jump 36 per cent last year, a third shift having to be added to meet demand. Year on year to January 20, Perth Mint sales were up 20 per cent; the US Mint sold 89,500oz of coins just in January; and the Royal Mint ran out of 2014 sovereign gold coins after unexpected demand.

lDeutsche sees an end to ETF gold liquidation.

Canadian giant Barrick Gold has announced a reduction in reserves and will close high-cost mines, a sign miners will extract only higher grade gold in light of the price fall. Deutsche sees miners worldwide looking more at unit cash cost rather than absolute production ounces.

Read: falling mine output, in which case where are the Chinese going to get their gold