Gold price set for ‘modest recovery’ in 2014

The precious metal lost nearly 30% of its value last year, the worst decline in decades

Ben Flanagan
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Gold is expected to see a “modest recovery’ in 2014 after last year’s dramatic decline in prices, according to market analysts.

The precious metal lost nearly 30 percent of its value in 2013, its worst decline in decades. The end of the 12-year bull-run came ahead of the U.S. plan to reduce its monetary stimulus.


Jeff Rhodes, founder and managing consultant for Rhodes Precious Metals Consultancy DMCC in Dubai, said that 2014 would be “a year of consolidation and modest recovery” in the gold market.

“My feeling about 2014 is that you’re likely to see the market consolidate and stabilize,” Rhodes told Al Arabiya News.

“I see the market year-on-year higher than the end of 2013, but not dramatically so.”

Rhodes said he forecasts an increase in the gold price of around 15 percent by the end of the year.

However, on an annual average basis he expects a decline of around 10 percent compared with the average gold price over the 12 months of 2013. That would give an average price of about $1270 an ounce for 2014, with the range of prices at $1100 to $1450, Rhodes said.

Infographic: End of the gold rush

Infographic: End of the gold rush
Infographic: End of the gold rush

Rhodes pointed out that the decline in gold prices in 2013 does not appear as dramatic when the 12-month averages were taken into account.

“The average price decline isn’t as dramatic… it’s down by about 15 percent,” Rhodes said. “It’s certainly not as gloomy as you would have thought.”

Gold prices are already up in 2014, with gains of 1 percent during trading on Friday, while global equities saw losses.

James Steel, chief precious metals analyst at HSBC, said this could be a trend for the year.

“Positive bullion prices in reaction to the decline in equities may set the tone for 2014 and reinforce the negative correlation between the two,” Steel told Reuters.

But other analysts said that the increase in gold could be short-lived. Edward Meir, metals analyst at brokerage INTL FCStone, told Reuters that a stronger U.S. dollar and lower crude oil prices could put pressure on the precious metal.

Gary Anderson, the chief executive of the Dubai Gold & Commodities Exchange (DGCX), told Al Arabiya News that he expects more volatility in the market this year.

“With continuing uncertainty surrounding the future of quantitative easing in the U.S. and the outlook for global markets, we are likely to see increased volatility for gold prices in 2014,” he said.

Anderson said that nearly 30 percent of the total global gold trade is conducted in Dubai.

“Diamonds, jewelery and precious metals - especially gold - remain Dubai’s biggest re-exports by value. In 2014, we certainly see the trend for precious metals remaining as Dubai’s primary exports by value continuing,” he said.

The executive added that DGCX was unable to comment on the prices, movement and recommendations with regard to the trading of gold.

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