More investment banks are turning bearish on the outlook for gold in 2013 following a nearly 10% decline the past three months.
“For the first time since 2008, in our view, the investment environment for gold is deteriorating as economic recovery, rising interest rates, and still benign Western inflation will leave some investors rethinking their cumulative $240 billion investment in gold over the past four years,” Nomura analysts wrote in a sector note last week.
The Japanese bank cut their forecast to $1,602 per ounce, from a previous 1,981 in 2013. The 2014 forecast is set at $1,750 from a previous $1,800. Gold prices have lost 12% since October 2012, and are down 18% from the high seen in 2011, reported Jack Farchy for The Financial Times.
Goldman Sachs also cut their forecasts for the gold outlook in 2014, while predicting a stop in gold prices this year, reported Katy Barnato for CNBC. BNP Paribas, Credit Suisse, Citi and Societe Generale also cut their gold forecasts for this year and the next.
In the past two months, however, ETF holdings have fallen in tandem with prices. While the drop is small relative to the total holdings in gold ETFs, it is still the largest sell-off on record. “It’s a little worrying,” says a fund manager with large investments in gold. “This has never really happened before.”