The value of gold looks set to make its expected decline. Trading ended in Asia and Europe with gold prices falling almost one percent before pulling back to a .24% once Wall Street traders hit the floor running.
Gold may be holding its own for the time being at least, but analysts forecast a steady decline towards the US$1000 during the course of 2014. With the global economy strengthening, market sentiment will turn to equities rather than the safe-haven of precious metals making 2014 a great time to add gold and silver bullion to your investment portfolios.
For the time being however, gold will probably stay afloat above the US$1300 until economic data coming from the US – the world’s largest economy – delivers positive data. Since the turn of the year, employment data and consumer spending in the States has been lower than predicted. Subsequently the US dollar has weakened and traders have stuck with gold.
Global economy growing
Investors in Asia and Europe however, are much more upbeat about their own strengthening economies. France and Germany has nudged up the Euro, the UK pound has been performing well for six months and even Italy reported growth – the first time in three years!
In the Far East, Japan enjoyed a search in stocks and now that China is back on the shop floor following the New Year break, currencies are beginning to look healthy again – except the US dollar that dipped last week and has levelled off this week.
It is unlikely that the US dollar will make a dramatic recovery just yet, but the Federal Reserve seem confident the economy will grow. In her first meetings as chairman of the US Central Bank last week, Janet Yellen indicated the Fed would taper its bond buying. Wall Street traders do not appear to share the new chairman’s faith.
Gold price drop
In the final forecasts of 2013, investment bank analysts predicted gold prices would fall in 2014. Survey published last week indicated sentiments has not changed and gold is expected to average US$1220 this year, dropping to as low as US$1064 per troy ounce.
Weak US data kept gold at an even keel for a good month before the yellow metal enjoyed a three-day rally following Yellen’s indication the Fed will continue to pullback its QE spending. Traders in the US a clearly wary about the sluggish form of economic growth.
But the cogs are beginning to click into place in key areas of the world and the US will surely follow. The biggest beast will naturally take the longest to wake from its slumber – and let’s not forget, many Americans were hit hard in the 2007 housing collapse and subsequent recoil.
The positive signs for the global economy are in place which will send gold prices into a downward spiral. It may a gradual fall with the occasional rebound which is natural for such a volatile market, but investors can look forward to adding gold and silver to their investment portfolios for low prices this year. And the long/term future of gold promises to make investors healthy gains!