Salient to Investors:
20 analysts expect gold prices to fall next week, 11 to rise, 3 neutral – the highest proportion of bears since Dec. 30, 2011. Gold is below its 200-day moving average, indicating more declines may follow. Gold fell in March in 6 of the last 9 years.
Hedge funds have cut bets on higher gold prices by 56 percent since October, while investors cut record bullion holdings in gold ETPs in 2013 and added to funds backed by other precious metals used more in industry. Central banks from Brazil to Russia are buying more gold to diversify from currency holdings.
Industrial usage accounts for 10 percent of gold consumption, versus over 50 percent for silver, platinum and palladium. Barclays and Rabobank Intl say usage will outpace supply this year in tin, platinum and palladium, while corn, wheat and cocoa will have shortages in the 2012-13 season.
Andrey Kryuchenkov at VTB Capital said the global economic recovery is on track and persistently decent macro data is denying gold its safe-haven status, with better returns available elsewhere.
In Q4 2012, Soros Fund Management reduced its investment in the SPDR Gold Trust by 55 percent, Moore Capital Mgmt sold its entire stake in the SPDR fund and lowered holdings in the Sprott Physical Gold Trust, while Paulson & Co., maintained its stake.
Credit Suisse said gold is unlikely to return to its September 2011 high of $1,921.15 because of accelerating US growth and contained inflation. Goldman Sachs expects gold to rise to $1,825 in three months and peak in 2013.
The IMF predicts global growth of 3.5 percent in 2013 versus 3.2 percent in 2012. Economists expect US and Chinese growth to accelerate in coming quarters. The median economist expects US economic growth to accelerate every quarter in 2013 to 2.7 percent in Q4. China is expects to grow 8.3 percent in Q3 from 8.1 percent in Q1.
John Meyer at SP Angel Corporate Finance said a lack of imminent financial disasters is pushing investors towards a more risk-on approach and away from gold.
Adrian Day at Adrian Day Asset Mgmt is accumulating, saying the monetary backdrop remains extremely positive for gold.
Robert Keck at 6800 Capital said economic activity in China and the US is telling us that commodities are poised to rise – Europe maybe slow, but the global economy is growing.
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