Gold prices on average may fall this year for the first time since 2001 as investors shift “away from extreme expectations of an imminent collapse of the global financial system,” CPM Group said.
The metal may average $1,565 an ounce in 2013, Jeffrey Christian, the managing director of New York-based CPM, said in an interview before the release today of the research company’s “Gold Yearbook 2013.” That’s down 6.2 percent from the spot average of $1,668.75 in 2012.
Holdings in exchange-traded products backed by the metal as of yesterday tumbled 177 metric tons this year, or 6.7 percent, data compiled by Bloomberg show. Billionaire George Soros cut his stake in the SPDR Gold Trust, the largest ETP, by 55 percent in the fourth quarter.
Investors perceive that “the global economy is likely to muddle along,” CPM said in a statement. “Present sentiment has reduced the urgency” to add gold to portfolios after the price average rose to a record last year, the company said.
Yesterday, gold for immediate delivery fell 0.2 percent to $1,605.09. The price has dropped 4.2 percent in 2013. The metal posted gains in the previous 12 years. The commodity surged to a record $1,921.15 in September 2011 as global interest rates remained low, while the U.S., Europe and Japan expanded monetary stimulus.
Investors bought 38.7 million ounces of gold last year, down 4.8 percent from 2011, while central banks and government institutions increased holdings by 9.5 million ounces, CPM said.
Newly refined supplies dropped 0.6 percent to 119 million ounces last year, partly because mines in South Africa were disrupted by labor disputes, CPM said. Output will increase in 2013, CPM said without giving a figure.
Fabrication demand climbed 1.4 percent to 70.8 million ounces in 2012, boosted by jewelry sales, CPM said.