SocGen analysts have predicted gold to fall to $1,200 per ounce by the end of the year. A previous prediction from them in April that the price would fall to $1,375/oz by the end of 2013 was beaten in two weeks as gold fell to $1,360.
The dramatic gold sell-off in April combined with the prospect of QE tapering, it says, has resulted in a paradigm shift in many investor's attitude towards gold.
This is likley to result in continued large-scale gold ETF selling this year and next. ETF gold selling has averaged about 100 tonnes per month since the April sell-off. We expect continued ETF selling to exceed higher demand for jewellery/bars and coins. Therefore, we have raised lower our Q4 13 gold forecast to $1,200/oz.
We don't think that the reported very high gold production costs will prevent the gold price trading dowen to $1,200/oz. And while production cost concerns may slow the price decline below $1,200/oz, this factor is unlikely to provide firm support until we get closer to $1,000/oz.
Goldman Sachs notably forecast last month that a fall to $1,200s would spell bad news for gold producers who would struggle to stay afloat.