Gold will average $1,219 an ounce this year and gain as much as 11 percent from now, after posting its biggest annual decline in three decades, a London Bullion Market Association survey of traders and analysts showed.
The metal will reach $1,379 and trade above $1,067 through December, the mean response of 28 participants shows. Prices slumped 28 percent last year, the most since 1981, and averaged $1,411, the least in three years. Silver will rise as much as 20 percent to $23.94 an ounce by December, platinum 13 percent to $1,650 an ounce and palladium 16 percent to $863.21 an ounce, the LBMA said today in an e-mailed report.
Bullion declined for the first time since 2000 and more than $73 billion was erased from the value of gold-backed funds last year as some investors lost faith in the metal as a store of value. The Federal Reserve said Dec. 18 it will trim monthly bond purchases to $75 billion from $85 billion, easing concern about faster inflation. Demand for jewelry, coins and bars increased as prices fell in December toward a 34-month low set in June, even as India’s government restricted bullion imports.
“ETF outflows look set to continue with an unfriendly macroeconomic backdrop of widespread growth, low inflation and lower tail risks,” said Matthew Turner, an analyst at Macquarie Group Ltd. in London, according to the LBMA report. “Continued strong Asian demand, helped by a likely easing of India’s import restrictions later in the year, should help prices recover to average only slightly below today’s level.”
Gold for immediate delivery traded at $1,244.12 by 12:34 p.m. in London. The Standard & Poor’s GSCI gauge of 24 commodities lost 2.2 percent last year, the MSCI All-Country World Index of equities climbed 20 percent and the Bloomberg Dollar Spot Index gained 3.5 percent. The Bloomberg U.S. Treasury Bond Index declined 3.4 percent.
The most accurate forecaster of average gold prices in the LBMA survey last year was Rene Hochreiter, a director and chief executive officer of Johannesburg-based Allan Hochreiter (Pty) Ltd., winning a one-ounce bar of gold. He expects the metal will average $1,150 this year.
Investors sold 869.1 metric tons from gold-backed exchange-traded products in 2013, more than they purchased in the previous three years combined, data compiled by Bloomberg show. Holdings reached 1,741.7 tons on Jan. 16, the lowest since October 2009.
Gold rose 70 percent from December 2008 to June 2011 as the Fed pumped more than $2 trillion into the financial system. The central bank’s debt-buying program will probably end later this year, according to economists in a Bloomberg survey conducted Jan. 10. U.S. economic growth will accelerate to 2.8 percent this year, from 1.9 percent in 2013, economist estimates compiled by Bloomberg show.
There are already signs of increasing physical demand. The U.S. Mint sold 83,500 ounces of American Eagle gold coins so far this month, heading for the biggest monthly total since April, data from the mint show. Turkey’s imports climbed 64 percent last month to the highest since July, data on the Istanbul Gold Exchange’s website show.
Silver for immediate delivery traded at $19.8724 in London today and will average $19.95 this year, the LBMA survey showed. It slumped 36 percent last year, the second-worst performer in the S&P gauge of commodities.
Palladium is seen averaging $774.81 this year, compared with $746.75 now, the survey showed. Platinum was at $1,457.63 and is expected to average $1,490, according to respondents. Both metals are mainly used in vehicle pollution-control devices and in jewelry.
“We do not expect the current situation on the global platinum market to change fundamentally in 2014,” Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt, said in the LBMA survey. “Global mining production is unlikely to increase significantly. Industrial demand is set to increase further. The automobile sector will also contribute to this since it should benefit from new emission standards for diesel vehicles in Europe.”