Goldman Predicts Steep Losses for Gold in 2014

Goldman Sachs Bets Cut On Gold Rally
Akos Stiller/Bloomberg via Getty Images
Goldman Sachs (GS) predicts a "significant decline" in gold in 2014, following losses of around 26 percent in the previous metal so far this year.

Bullion is set to fall at least 15 percent next year, the bank said in a report of the top 10 market themes for 2014 this week, which warned of the growing downside risk for commodities.

The decline would bring gold down to $1,057 an ounce -- prices not seen since early 2010.

Gold suffered a sharp fall this week as better-than-expected U.S. economic data raised the possibility that the Federal Reserve may start scaling back its $85-billion-per-month bond-buying program earlier than anticipated.

According to some market watchers, gold has yet to fully adjust to the reality of tapering, and is vulnerable to further weakness when the central bank finally begins to wind down its monetary stimulus -- a major pillar of support that has driven gold to record high near $1,920 in September 2011.

"Gold is extremely sensitive to the Fed tapering monetary stimulus. Back in September when we had a surprise announcement from the Fed that we're not going to taper anytime soon, we saw gold rally 5 percent," Matthew Grossman, senior equity strategist at T-3

"And then just a couple of days ago,
the Fed minutes came out and they said taper is more likely sooner than later. And what happened? Gold fell 3 percent. We're seeing a very high correlation with that," Grossman said.

Gold bulls, however, remain unfazed. Victor Thianpiriya, commodities analyst at ANZ, expects the metal to hit $1,450 by end-2014, or 16 percent higher than current levels, driven by robust physical demand from China -- the world's largest jewelry market.

"China has surprised the market on how strong demand has been. There's also potential for Indian demand to come back," he said.

Chinese consumer demand totaled 210 metric tons in the third quarter, a rise of 18 percent compared to the same period last year, according to the World Gold council. In India, however, consumption fell 32 percent on year to 148 metric tons, due to government's crackdown on gold imports.

Thianpiriya said he doesn't expect gold to get caught in a major sell-off when the Fed decides to taper. "Gold has priced a lot of that in. We don't think the reaction of markets will be quite the same," he said.

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Robert & Lisa

And what idiot is going to take Goldman Sachs argument? This from the people who would have gone bankrupt if Obama had not bailed them out.

November 23 2013 at 6:06 PM Report abuse rate up rate down Reply
Robert & Lisa

With our government printing 85 billion dollars a month, I would not bet against any precious metal.

November 23 2013 at 5:59 PM Report abuse +1 rate up rate down Reply

big losses for gold, lets see, country over 20 trillion in debt and climbing, the government at every level, federal, city ,county and state raising taxes ,fees,tolls and adding more of the same, health care that is becoming more and more expensive, job creation that is a joke, in numbers and type of jobs being created and the worst item , we still have the same crooks running our banks, wall street and to many of our corporations, especially insurance, and our bond rating agencies. we still have the SEC which is totally inefective and do not forget the massive self serving pocket linning curruption that is the hallmark of our politicians.

November 22 2013 at 12:07 PM Report abuse -2 rate up rate down Reply

We would be better off not carrying the blue states, mac/evan. All the welfare people I have come in contact with are Dems. Soon all states will be blue as they learn they can vote themselves anything they want.

November 22 2013 at 12:03 PM Report abuse +1 rate up rate down Reply
1 reply to betty_brock's comment

Actually, it's the red states, by far, that are on the federal dole. Alaska leads the pack. But all of the southern states - except Texas - take more in federsl hand outs than they pay in federal taxes. I doubt that it's only Dems in those states puting that money in their pockets.

November 23 2013 at 2:03 PM Report abuse -2 rate up rate down Reply
2 replies to robantm's comment

Dems have caused it. All welfare recipients are Democrats. Soon they will take over.

November 23 2013 at 3:58 PM Report abuse +2 rate up rate down
welcome eric

I love it how liberals frequenty tout thismythology:

January 25 2014 at 1:40 AM Report abuse rate up rate down

Wow, some really inane comments here. Yes gold is manipulated and goes up and down. But just what do you think the paper games are? What is the history of fiat currency? Just sayin.

November 22 2013 at 12:03 PM Report abuse +1 rate up rate down Reply

The Red states need their own country, they surely no longer believe in America or its people. The reason we have a USA Federal Currency is to avoid Pa from having coal lumps as currency, AZ as having copper pipe as its currency, etc. If every state decides to 'ok' a different item for its currency, the NATION is GONE. We have Federal laws, Federal Banks, Federal Money, Federal Aviation, Federal Rail, Federal Highways, Federal Military for a reason, to have 50 separate systems operating at the same time is NOT workable. Republicans, Wake up your representives are harming all that you and your country stand for, and that will not go well with the rest of the world...

November 22 2013 at 10:44 AM Report abuse -5 rate up rate down Reply
5 replies to mac2jr's comment

Gold has gone up and down over the last two hundred years, look it up. It has been up to $1,500 back nearly 100 years ago, then it sank to a few dollars, went back up, sank, back up, sank, etc., the reason is simple, the 'big boy' investors know how to 'play' the market and the fools, and will again 'crash' the gold while it is at record highs and profit the differences, while watching and laughing at the fools that thought that he or she was going to get rich.... poor suckers...

November 22 2013 at 10:44 AM Report abuse -1 rate up rate down Reply

Years ago while living in Arizona, we had an 'underground' currency that was traded from business to business. This 'paper' money gave 'credit' for doing a job to the store keeper who used the credits to obtain something from the other stores in the loop. This worked, but was totally illegal and it cheated the people for there was no sales or income taxes collected, and therefore those not in the underground were paying for water, road, police, fire, and other services for those 'cheats' that screwed over the taxpayers....

Today we have Digital Currency, which is about to undergo a Congressional review and probable taxation.

November 22 2013 at 10:43 AM Report abuse -2 rate up rate down Reply

Buying Gold

The Hunt Brothers should have taught all a very expensive lesson, but it seems that history has to repeat, and repeat, and repeat until the greedy find that greed always leads to some con-artist taking all you have.

If you look at the history of Gold from two hundred years ago to now, you will see that it peaked at various times in history, mainly in times of worry like war, or times of worry like depression. Gold has been up at the $1,000 or more price per ounce several times only to fall, fall, fall to lows that wiped out the owner's investments for decades.

November 22 2013 at 10:41 AM Report abuse -1 rate up rate down Reply

Gold was used for decorations and jewelry for several thousand years. The Con is that when the USA economy gets bad the cons talk everyone into buying Gold and when it is near peak the sellers drop a ton of it on the market and depress the value to near zero, and they then buy it up and start the cycle all over again

November 22 2013 at 10:41 AM Report abuse -2 rate up rate down Reply