Goldman Sachs Forecasts Lower Gold Prices

The price of gold fell some $20 to $1277 an ounce on Monday and Goldman Sachs predicted further falls over the next couple of years as the more stable economic situation and higher real interest rates encouraged investors to seek returns elsewhere.

Even the growing popularity of gold as a wedding present in India, the biggest retail market for the precious metal, cannot stop the price tumbling further according to the investment bank.

Analysts at Goldman said hints by the Federal Reserve chairman, Ben Bernanke, that he is preparing to restrict the supply of cheap central bank funds has triggered the steep decline.

“We expect that gold prices will decline further given our US economists’ forecast for improving economic activity and a less accommodative monetary policy stance.

“We expect this decline in prices to coincide with rising jewellery/retail demand, which we view as price responsive and not price setting,” it added.

via The Guardian

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza