In the U.S., economic uncertainty over the fiscal cliff may negatively impact gold prices through 2013. If Washington reaches a deal that averts the cliff, then gold demand may shrink as the outlook for economic growth within the U.S. improves. Earlier this month Goldman Sachs cut its 3, 6, and 12-month forecasts for gold prices, which are currently near $1,700 an ounce. They were cut to $1,825 per ounce, $1,805 per ounce, and $1,800 per ounce respectively. The bank stated that, “Our expanded modeling suggests that the improving U.S. growth outlook will outweigh further Fed balance sheet expansion, and that the cycle in gold prices will likely turn in 2013.”
The European bank BNP Paibas also cut its 2013 forecasts for gold prices. BNP claimed its lowered expectations were based on cautious market sentiment. BNP cut its 2013 forecast to $1,865 an ounce from $1,900 an ounce. Conditions in the Eurozone remain unstable as European nations struggle to recover from the recession. The European region may find it difficult to return to a state of growth by the end of 2013.
The lowered expectations of growth for the global economy, U.S. economic growth, and uncertainty in the Eurozone will drive prices for gold down in 2013.
Author: Tyler Sciortino
Current Student at Roosevelt University, Majoring in Finance.
Contact for questions or inquiries at tsciortino@mail.roosevelt.edu