The macroeconomic environment in 2012 is tuned for uncertainty, variability and heightened anxiety. The EU will have to choose whether to print money or face a recession; U.S. policy remains complex, while the growth of China and India has fallen.
Gold prices reached half-year lows in December 2011 when they came under pressure from investors and banks looking for cash and weak physical demand from China. Since then, they have recovered steadily, but have fluctuated below the 200-day moving average of $ 1,634. However, yesterday (10.10.2012) gold finally overcame this barrier, which suggests that gold can now gain momentum and start growing more steadily.
Moorenbeld, chief economist at Dundee Wealth Economics, sees monetary relations (or quantitative easing) as the main bullish factor in gold prices. If Europe wants to avoid a recession, it may well be necessary to launch a version of the quantitative easing, if this happens, it is unknown where the price of gold will go.
In the short term, the strength of the US dollar is the most limiting factor for gold prices. However, it is fundamentally inflated, and as such Congress can force a “devaluation,” which in turn will be beneficial to gold.
Despite the recent slowdown in China, demand for gold remains strong due to rising wealth, fears of inflation, easing monetary policy and, of course, the approaching Chinese New Year. However, if the Chinese economy does start a recession, gold prices could drag on.
Most banks have lowered their gold price forecasts for 2012. HSBC chief analyst James Steele changed his forecast to $ 1,850 based on a weak euro, liquidation and disappointing physical demand from developing countries. Barclays forecasts an average of $ 1875, and Deutcsche Bank has cut the average forecast to $ 1825. However, all of these adjusted forecasts can still be considered bullish, given the current gold price of around $ 1630.
According to the annual review of industry forecasts by the London Bullion Association (LBMA), the 23 largest bullion banks have predicted that gold prices will exceed the maximum of $ 1920 reached in 2011 and could exceed $ 2,000 in 2012.
Negative real interest rates and the purchase of gold from central banks will continue to maintain the attractiveness of buying gold. The amount of available physical gold is declining due to demand from developing countries and accumulation by central banks. As a result, increased demand from investors is likely to lead to a long-term upward trend in gold prices, leading to an increase in the average over the next few years.
This year, gold prices are likely to be as volatile as in 2011, with large profits often accompanied by a decline that could lead investors to question the gold class. Possibly gold bears were everywhere by the end of 2011, predicting lows of $ 1,000 or less, but they were wrong, as in the past, and now gold is shaking off year-end losses and preparing for another bull run, so if you haven’t already may be the perfect time to invest in gold.