Gold Moves Up Slightly During MLK Day While Citi Cuts 2013 Gold Forecast

Monday, 21 January 2013
Written by  Market Watch
Published in Gold Investing

Gold was up slightly today as the markets were closed in honor of Martin Luther King, Jr. day. While the day of trading was quiet for the most part due to the holiday, the yellow metal was able to inch up some without the markets.

First-Strike

Gold futures for February GCG3 -0.07% were able to move up by $2.50 to $1,689.40 an ounce. The yellow metal closed out last week 1.6% higher, while silver inched up 8 cents to $32.01 an ounce for the March contract. Overall both precious metals had a decent day considering that most are away celebrating one of the great days in our history.

On another note, Citgroup analysts cut their gold forecasts for 2013 by 4.2% to $1,675 a troy ounce and 0.2% to $1,653 a troy ounce for 2014. Their silver price forecasts remained unchanged. This is quite a cut for the forecast of the yellow metal, as many still think it will make some sort of run at the $2,000 per ounce price mark.

“Indeed, gold’s recent struggle to sustain itself beyond the $1,800 technical resistance level despite seemingly conducive conditions such as record low interest rates and fiscal uncertainty has cast doubt onto the bullish case for gold among the investor community,” said the analysts in a note.

Some downers pointed out by Citigroup: Central bank net purchases for gold have fallen from their 2009 peak, jewelry demand continues to fall and private-sector demand may be set to follow. Public and private net investment into gold was positive in 2012.

“Investors appear to be losing faith in the bull story for gold, if net managed money positions on Comex provide a reasonable guide,” said the analysts, who noted that net long managed money positions on Comex have dropped by 50% since the start of October 2012. Positive flows for exchange traded fund investing — an important gauge of investor sentiment — has also stalled since that month, with 17 metric tons of redemptions seen so far in 2013.

It should be interesting to see how this plays out, as most of the big companies have now provided new gold forecasts for 2013 and into 2014. All of these forecasts have gold lower than originally expected, but the Citigroup forecast is the lowest one to come out yet. Original Article: Market Watch by the Wall Street Journal
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