Safe haven demand, due to events in the Ukraine, continues to support the price after rallies following NFP data fizzled out. Silver and the PGMs also climbed by about 1%.
Bearish predictions on the gold price
In a new report from Morgan Stanley, we learn that gold is their least preferred commodity as the factors that boosted gold in Q1 are, apparently, no longer evident today.
One of those alluded to by analyst Joel Crane is the Ukraine situation that boosted safe-haven demand.
Something that Morgan Stanley believe will no longer be a major driver in this year’s gold price. Having said that, tensions increased once again yesterday and the bank have increased their average 2014 price by 5% to $1,219/oz.
Bloomberg reports, ‘“As many of the factors that supported prices in the first quarter dissipate, we believe the gold price is set to resume a declining trend,” Crane wrote. Over six months, equities, credit and the dollar are favored over haven assets, he said.’
This sentiment is something that has been acknowledged by Goldman Sachs’ Jeff Currie, who believes the factors that drove the gold price up in the first quarter were ‘transient’ and as the US begins to recover there is unlikely to be much support for the gold price.
Realistically, gold overreacted when tapering was first announced, and any meaningful tightening from the FOMC on monetary policy, or any other central bank for that matter, is unlikely.
We should also look to increasing demand from India as the price falls and restrictions are relaxed.
Despite the above, unfortunately even those who work in the gold investment industry are feeling bearish about the 2014 gold price.
The three-day Dubai Precious Metals Conference came to a close yesterday with many of the participants giving their forecasts for gold and silver this year.