Gold market update - 11th March 2014
There has been a steady climb in Gold prices over the past several days,
blamed mostly on the Ukraine crisis, offsetting the downward movement
of the recent, unexpected drop in Chinese exports.
Focussing on Ukraine, analysts everywhere are predicting which way
things will go. Russia is still present in the Crimea and eastern
Ukraine, and NATO is monitoring the situation from AWACS jets from
nearby Poland and Romania. With the situation still tense, investors
have looked to Gold as a safe haven, which may only be a temporary
measure. As for the crisis escalating, Russia risks severing essential
economic ties to Europe, especially at a time when the Rouble is already
suffering, so Russia could stick to the negotiating table instead.
As gold prices are typically flat during March, we may see spot gold
more or less plateau at current levels, at the most steady rises without
any significant upturns in the market until May.
With regards to long term forecasts, Morgan Stanley has a negative
outlook for 2014-15. While mentioning the positives of the Fed’s
stimulus, also noted increased regulatory pressure on the financial
sector and lowered Gold imports to India, counterbalancing strong demand
from China. Goldman Sachs also feels that Gold’s recent performance
will eventually turn negative, and as China has said it expects that
Gold imports will reduce by about 17%. However, Coutts are remaining
bullish, citing rising incomes in China fuelling demand for luxury items
such as jewellery. It could be that Chinese demand may act as a safety
net against any sudden falls in the long term, and with the economic
recovery continuing in the US and Europe, the market may yet be a little
more confident overall; investors may steer away from Gold in favour of
alternative investments. If the crisis in the Ukraine continues though,
investors may continue to seek Gold as a haven investment, going
forward, pushing prices up.
11 Mar 2014 | Categories: Gold
