UNITED STATES April 21 2014 1:35 PM
NEW YORK (Scrap Register): Global gold prices are expected to average $1250 an ounce this year, said Barclays.
After a brief push to price levels around $1325 an ounce, gold has fallen back towards $1300 an ounce, but Barclays still believe its next move will be lower. Ukraine tensions may have given gold a temporary boost, as have bouts of weakness in equities and in US Treasuries, but our longer-term fundamental expectations continue to point downwards.
While the apparent stabilization in investor interest may bode well for prices in the near term, we caution against interpreting the m/m stabilization in ETP flows as the beginnings of a long-term trend. Inflows totalled 11.5 tons in March, after inflows of just over 7 tons in February – the first and only two months of inflows since 2012.
So far in April, however, outflows have nearly erased the m/m gains seen in March. The rise in speculative positioning in Comex gold ended at the end of March, falling over the following three weeks since 18 March, when it hit its highest level since April 2013.
Additionally, the latest data from the US Mint show that retail investor interest is lower y/y for every month so far this year, putting 2014 figures significantly lower YTD, even after grossing up March sales. That said, so far in April, coin sales have proven stronger than those seen over all of March and are on target to surpass those of February.
On the horizon, however, one upside risk to prices is any possible easing in the gold trade restrictions in India – a key factor to watch in our view. Outside that, Chinese gold demand has been seasonally weak since the end of the Lunar New Year, but wedding-related demand could provide a cushion for gold on the downside later this year – likely not solid enough of a cushion to overcome other fundamental factors, however.