Gold prices to continue losses to 2014 says Morgan Stanley
10 October 2013 11:49am
Morgan Stanley has forecast a continues further fall in the price of gold into 2014 as the Federal Reserve begins the process of tapering its bond buying programme. Morgan Stanley analyst, Joel Crane, speaking in a video report said:
We recommend staying away from gold at this point in the cycle.
Our forecast profile heading into next year is relatively flat against our expectations of rising real interest rates and the U.S. dollar.
In its quarterly metals report published on October 7, the corporation expected bullion to average $1,313 a ounce in 2014 down from the 2013 average of $1,423. Bullion is set to face its sixth weekly loss in seven, despite the US government shutdown. Indeed bullion may be heading for its first annual loss in 13 years falling by 22 per cent in 2013.
Following the announcement in June that the Fed was going to taper its bond buying programme, the price of gold dropped to a 34-month low of $1,850.50. Morgan Stanley's bearish outlook on gold follows a string of similar forecasts by Goldman Sachs and Credit Suisse. Jeffrey Currie, head of commodities at Goldman described gold as a "slam dunk" sell. Goldman has estimated that gold may fall to as low as $1050 an ounce by 2014 while Credit Suisse $1,180.
Despite announcement that the Fed would delay tapering, Morgan Stanley remains confident about the Fed's intentions to begin the process.
Morgan Stanley analysts wrote on 7 October:
Tapering has been postponed not canceled, and is expected by year end.
We also expect the political stalemate in Washington to be broken before the debt ceiling is breached. Consequently, we see little immediate upside to the gold price either in the immediate future or next year.
711.8 metric tons of have been sold been from bullion-backed exchange-traded funds this so far this year.
In other news
The outbreak of bird flu in the US is leading to an unprecedented situation for companies reliant on eggs – [Read more]
Germany's finance ministry has denied reports it was considering offering Greece its own parallel currency. [Read more]
Chancellor George Osborne was given a boost today, as higher tax receipts helped shrink the deficit by more than [Read more]
Beleaguered spread-betting firm Plus500 today suspended trading in its shares on London's junior market, following [Read more]
The news that card and electronic transactions have overtaken cash as the UK’s preferred method of payment is [Read more]
Former secretary of state for communities and local government Eric Pickles is to be knighted, 10 Downing Street [Read more]
Network Rail engineers have destroyed the Abbey Wood station as part of the Crossrail development that is expected [Read more]
The Championship looks set to once again be named the fourth most-watched league in Europe, following a seven [Read more]
The Costa Coffee owner said Brittain was "the standout candidate from a very strong field". [Read more]
Sugary foods may be taxed to cover the costs of treating obesity, a government minister has said.
European governments must increase efforts to adopt structural reform if “lasting stability and prosperity” [Read more]
Accounting, finance and economics - choose to study any of these subjects anywhere and you'll be likely to land [Read more]
Badly-behaved bosses are a nightmare if you're the unfortunate employee who has to work for them - but they're [Read more]
Last night hundreds of people in Kent were woken by a 4.2 magnitude earthquake, which occurred just before 3am. [Read more]
Are the UK's new crop of MPs actually any good at social media? [Read more]
The retail industry is in a state of flux. Consumers and technology are driving fundamental changes. And now, [Read more]