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 live.com.

"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.


More from CNBC:


Increase your money and finance knowledge from home

Goal Setting

Want to succeed? Then you need goals!

View Course »

Introduction to Value Investing

Are you the next Warren Buffett?

View Course »

Add a Comment

*0 / 3000 Character Maximum

20 Comments

Filter by:
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
TINKDAY

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
betty_brock

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
robantm

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
betty_brock

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:

http://www.americanthinker.com/2013/09/the_myth_of_red_state_welfare_comments.html#disqus_thread

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

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
createidea

Despite what people believe, Gold prices - much like most things - are manipulated by the government.

Remember, if gold becomes the standard, those printing presses in Biden and Obama\'s basement becomes worthless.

It\'s all a big joke.

November 22 2013 at 10:22 AM Report abuse rate up rate down Reply
coledude

\"Victor Thianpiriya, commodities analyst at ANZ, expects the metal to hit $1,450 by end-2014\"
Well Victor if you think the \"demand from China\'s jewelry market\" is going to push gold that high you are \"high\" !! China is about to have a real estate bubble melt down..

November 22 2013 at 10:01 AM Report abuse +1 rate up rate down Reply
jdykbpl45

Is this an inverted tip to buy?

November 22 2013 at 9:15 AM Report abuse -1 rate up rate down Reply
pdbliz

I buy glass fruit jars for my money....... If this was good for the old timmers,,,it is good for me.
GOVERMENT CONTROL BOTH GOLD AND PAPER MONEY,,,FOR,,,I HAVE NO FAITH IN IT EITHER...
AMMO IS THE BEST THING TO BUY NOW.!!!!

November 22 2013 at 8:33 AM Report abuse -1 rate up rate down Reply
1 reply to pdbliz's comment
pdbliz

thank you rickperryoops2 for your negitives.....You are typical,,,if you do not agree,,,just give negative...
I read yours,,but,,did not post a vote,,,,,,but,,,NO PROBLEM.....

November 22 2013 at 8:44 AM Report abuse -1 rate up rate down Reply
pdbliz

Someone ask me,,,Can Obama Care be Repaired.???
Obama care was written just like it is being mandated. Obama Care is right on track as Obama wants it...
It was written to fail...Or at least make the public think so....
But,,Obama care is on track to Obamas wishes for this country....
TO BE COME JUST LIKE EUROPE,,,,,,SOCIALISUM AND COMMUNISUM FORM OF GOVERMENT...

November 22 2013 at 8:11 AM Report abuse -3 rate up rate down Reply