November 13, 2012 3:52 pm

Cautious outlook for gold in 2013

The gold industry is cautiously optimistic about the coming year after a lacklustre 2012, according to the consensus of bankers, traders and investors gathered in Hong Kong at the industry’s largest annual meeting.

More than 700 delegates attending the London Bullion Market Association conference this week predicted the price of gold would rise to $1,849 a troy ounce by the time of the next year’s conference in September 2013, according to Bloomberg.

While that implies a 7 per cent rise from current prices of $1,729, the prediction – probably the single most comprehensive consensus of the gold industry’s most powerful traders and investors – is markedly less bullish than a year ago.

Last year, the LBMA delegates predicted that gold would be trading at $2,019 a troy ounce, a prediction made just weeks after the yellow metal hit a nominal record of $1,920 in September. Instead, since last September the price has fluctuated between the $1,530 to $1,800 a troy ounce.

The delegates left the LBMA conference in Hong Kong less optimistic than they had arrived. In a survey taken at the beginning of the conference they predicted a gold price of $1,914.

In China, the world’s biggest consumer, enthusiasm for gold has eased because of the rise in price volatility, an executive of the country’s largest gold retailing bank told Reuters.

Zheng Zhiguang, general manager of the precious metals department at the Industrial and Commercial Bank of China, said that physical gold sales at the bank so far this year had been flat from a year earlier. ICBC’s gold sales almost doubled in 2011, Reuters reported.

But he added that the Chinese gold market still had “huge potential” for growth, echoing a widely held view in the industry.

“Steady economic growth, increasing income, the launch of new products, as well as a maturing and expanding market, will drive this market forward,” Mr Zheng told Reuters. “China’s market has just started.”

Despite an initial bounce, gold has so far failed to capitalise on the re-election of Barack Obama as US president, which removed the risk that the Federal Reserve’s loose monetary policy programme could be halted early.

Prices have stabilised at about $1,730 a troy ounce, having failed to break convincingly above $1,800 on three occasions in the past year.

“The price can trend a little bit higher,” Tom Kendall of Credit Suisse told Bloomberg. “It’s going to be a market that needs fresh stimulus or a new geopolitical headline to get investors really excited about gold again.”

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