Gold Seen Climbing to $1,405 an Ounce Next Year in LBMA Survey

Gold may advance 8.8 percent to $1,405 an ounce in about a year, according to the average response in a survey of attendees at the London Bullion Market Association’s conference in Rome.

The estimate is 27 percent below the record $1,921.15 set in September 2011. Silver, platinum and palladium will also rise by the time of the LBMA’s gathering in Lima in November 2014, today’s survey showed.

Bullion is set for the first annual drop in 13 years as some investors lose faith in the metal as a store of value amid signs economies are strengthening. Holdings in gold-backed exchange-traded products are the lowest in three years on speculation the Federal Reserve, which maintained monetary stimulus last month, will begin to curb its bond purchases.

“The monetary and investment argument for gold is negative, but the physical side is generally positive,” James Steel, a HSBC Securities (USA) Inc. commodities analyst, said in an interview in Rome. “Continued high levels of Chinese demand will be supportive. Expectations for Fed tapering are largely digested. Pressures will be if tapering is faster and more severe than expected.”

Gold for immediate delivery traded at $1,291.88 by 4:23 p.m. in London, set for a 23 percent decline this year. A survey of attendees at last year’s conference in Hong Kong in November forecast bullion would increase to $1,849 by this year’s gathering.

More Evidence

The Fed said on Sept. 18 it wants more evidence of an economic recovery before slowing its $85 billion-a-month of bond buying. Chairman Ben S. Bernanke surprised analysts who predicted a $5 billion cut, saying he was concerned that market interest rates, driven higher by his own suggestion he would scale back stimulus, would curb growth.

Gold advanced as much as 21 percent from a 34-month low in June through late August as lower prices boosted demand for jewelry, bars and coins, particularly in Asia.

Fifty percent of those surveyed said exchange-traded product investors will be net buyers in 2014. Holdings fell 27 percent this year as of Sept. 27.

Among those surveyed, 17% percent said gold would be the best performing precious metal next year; 16% said silver; 33% said platinum; and 34% said palladium.

Silver will climb 20 percent to $25 an ounce by the next annual meeting, according to the survey. Platinum will increase 22 percent to $1,675 an ounce and palladium will advance 17 percent to $837 an ounce, it showed.

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