The macroeconomic environment in 2012 was set for uncertainty, instability and increased anxiety. The EU will have to choose whether to print money or face a recession; US policy remains difficult, and growth in China and India has slowed.
Gold prices hit a six-month low in December 2011, when they came under pressure from investors and banks looking for money and weak physical demand from China. Since then, they have been steadily recovering, but have remained below the 200-day moving average of $ 1,634. However, yesterday (October 1, 2012) gold finally broke this barrier, which suggests that gold can now gain momentum and begin to grow more steadily.
Murenbeeld, chief economist at Dundee Wealth Economics, sees the monetary link (or quantitative easing) as a key bullish factor in gold prices. If Europe wants to avoid a recession, it may have to release a version of quantitative easing, if that happens, there is no way to say where the price of gold will end up.
In the short term, the strength of the US dollar is the most limiting factor for gold prices. However, it is fundamentally overvalued, and as such Congress could impose a “devaluation,” which in turn would be good for gold.
Despite the recent slowdown in China, demand for gold remains strong thanks to growing wealth, fears of inflation, easing monetary policy and, of course, the approaching Chinese New Year. However, if the Chinese economy plunges into recession, gold prices could be reduced.
Most banks lowered their gold price forecasts for 2012. HSBC’s chief commodity analyst, James Steele, changed its forecast to $ 1,850 based on a weak euro, liquidation and disappointing physical demand from emerging markets. Barclays averaged $ 1,875, and Deutcsche Bank lowered its average forecast to $ 1,825. However, all these adjusted forecasts can still be considered bullish, given the current price of gold around $ 1630.
According to an annual industry forecast study by the London Bar Association (LBMA), 23 of the largest bullion banks have predicted that gold prices will exceed the highest value of $ 1920 reached in 2011 and may to exceed $ 2,000 in 2012
Negative real interest rates and the purchase of gold by central banks will continue to support the attractiveness of buying gold. The amount of available physical gold is shrinking, thanks to demand from emerging economies and accumulation by central banks. As a result, increased investor demand is likely to lead to a long-term trend of higher gold prices, which will lead to an increase in the average over the next few years.
This year, gold prices are likely to be as volatile as in 2011, with large gains, often followed by declines that could lead investors to question the asset class of gold. Golden bears may have been everywhere by the end of 2011, predicting low levels of $ 1,000 or less, but they were wrong just like in the past and now gold has shaken off losses at the end of the year and is preparing for a new bull, so that if you’re not already this may be the perfect time to invest in gold.