Research from iconic investment bank says gold could reach US$1,900 by the end of 2013, or fall to US$1,625 by the end of 2014

Research from iconic investment bank says gold could reach US$1,900 by the end of 2013, or fall to US$1,625 by the end of 2014

Goldman Sachs says that if US growth falters in 2013 the gold price could rise to US$1,900 per ounce.

Gold opened trading today at US$1,690 per ounce; in local currency that is NZ$2,012 per ounce where it has been hovering for some time.

The investment bank says in a research note released late last week that gold prices reacted less to easing that did not require Fed balance sheet expansion, such as its Operation Twist program, than to announcements of easing through expanding its balance sheet.

It said its forecasts for higher gold prices in recent years had been motivated by ultra-low real interest rates and central bank gold buying, which last year hit its highest since the mid-1960s at 455 tonnes.

But not all announcements of quantitative easing measures, a form of loosening monetary policy, had driven price spikes, it said.

With risks to US economic growth outlook still elevated, especially given the uncertainty around the debt ceiling debate, calling a price peak was "a difficult exercise."

"The uncertainty associated with these issues, combined with our economists’ forecast for weak U.S. GDP growth in the first half of 2013 following the negative impact of higher taxes will push gold" to the three-month target," they wrote.

Having said that, Goldman's own growth forecasts for the US economy are fairly positive, and on that basis it has cut its own forecasts for the gold price to US$1,800 per ounce.

"Medium term ... the gold outlook is caught between the opposing forces of more Fed easing and a gradual increase in real rates on better US economic growth," they said in the report.

If the US growth continues and the Fed pulls back from its interventions, it sees the prices of the precious metal fall in 2014, ending at about US$1,625 per ounce.

At current exchange rates of NZ$1 = US$0.8400, that would price the metal here at NZ$1,935/oz

If our exchange rate continues its rise, as many observers expect if the New Zealand authorities maintain their hands-off approach, it could reach NZ$1,800/oz at NZ$1 = US$0.90.

On the other hand, if Goldman's price forecasts eventuate at the end of 2014 and the New Zealand dollar falls, say to NZ$1 = US$0.65, then the local price would hit NZ$2,500/oz.

Or Goldman Sachs could be completely wrong with their forecasting.

------------------------------------------------------------------------------------------

You can find detailed, up-to-date pricing for gold coinsbars/bullion, and gold scrap, all in both NZ$ and US$, here »

------------------------------------------------------------------------------------------

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

3 Comments

Comment Filter

Highlight new comments in the last hr(s).

If Goldmans are saying Gold to  $ 1900 by the end of the year then it could well go higher - much higher , FED`s have been caught with there pants down with not enough gold to give the germans , a gold war is on now , my advise is to get in now while it is cheap .
 

Lets add some context,
1) and this is productive in National terms how? ie what is actually made? oh wait nothing its a pure gambling play that bigger fools will buy off you.
2) based on thier past success do you really trust Goldmans to get anything right?
 
regards

Back in 5 June 2011 i posted this
http://www.interest.co.nz/kiwisaver/53740/kiwisaver-tax-credits-sneaky-tax-gouge-disguise-nationals-tinkering-tops-government-
Note this article i reported was written on 20 May 2010
Thought it may interest you
By The Mogambo Guru

05/20/10 Tampa, Florida

The long bear market from 1966-1982, was stopped in its bear tracks by the passage of new legislation by Congress in 1982, which authorized IRAs and various other tax-advantaged retirement plans, so that soon, and ever since, everybody in the whole place started having part of their incomes taken out, tax free, and invested in the stock market, which resulted in money literally pouring into the stock market, week after week, month after month, year after year, more and more and more in a gigantic stock market bubble, continuing to inflate in a huge bull market that lasted to the year 2000.

Of course, the Reagan tax cuts and monstrous new deficit-spending helped get the boom started, too, and then, of course, the loathsome Alan Greenspan was made chairman of the Federal Reserve in 1987 to make sure that money was being continuously created to feed this insanity.

The point is not what a bunch of idiots we were, and still are, or how the Federal Reserve is a loathsome monster that is more corrupt than the Congress that created it in 1913, and then aided and abetted by corrupt Congresses ever since.

No, the point is, being as pithy as I can, that “We’re Freaking Doomed (WFD)!” The good news is that this is good for gold because those selling out early in a falling stock market, and those selling out early from a falling bond market, and those selling out of all overvalued assets in falling asset markets, are going to look around and wonder, “What do I do with all of this money?”

And that is when gold and silver will soar, which will one day, years and years from now, be your chance to sell astronomically high then after buying ridiculously low now, which is, as they say, how successful investing is done.

And with simplicity like that, how can you not say, with a big ol’ smile, “Whee! This investing stuff is easy!”?