Gold’s set for a ‘Goldilocks’ year: Sharps Pixley «
SAN FRANCISCO (MarketWatch) — Gold futures climbed on Monday, with prices holding ground at their highest in a month after two-consecutive sessions of price gains and last week’s less-than-stellar U.S. monthly jobs data.
Analysts at Sharps Pixley said the metal’s poised to see a “Goldilocks” year, with prices scoring an average above the current level.
Gold for February delivery /quotes/zigman/9159480/realtime GCG4 +0.10% tacked on $4.20, or 0.3%, to settle at $1,251.10 an ounce on the Comex division of the New York Mercantile Exchange after trading in a tight range of around $12 an ounce between the day’s high and low.
Prices closed at their highest since Dec. 11, according to FactSet data tracking the most-active contracts. Including Monday, they’ve tallied a three-session gain of roughly 3%.
“It feels like the market just might be on the turn; much of the gold negative news is in the price and investor appetite seems to be insatiable at these levels,” Ross Norman, chief executive officer at Sharps Pixley, told MarketWatch on Monday. “Besides, with oil above $100 a barrel, we should of course be closer to the $1,600 level. Perhaps that’s for 2015.”
On Friday, a dismal reading on December U.S. nonfarm payrolls lit a fire under gold prices, pushing them up to their highest close in four weeks.
Enlarge Image But bears said it would take more than one dismal jobs report to sustain a rebound for gold.
“We believe it will take a persistent structural shift, including signs of inflation or delayed interest rate hikes, to change its soft outlook,” wrote analysts at Barclays, in a note. “We have revised down our 2014 average price for gold to $1,205 and expect a fresh low of $1,050 to be tested this year.” Read: Barclays analysts say don’t get fooled by gold again.
Meanwhile, a string of economic numbers are on tap this week, so the market may see more volatility. Read: Economic Preview.
‘Goldilocks’ year for gold
Analysts at Sharps Pixley, in a note on Monday, said they see a weak first half of the year for gold as “the western selling tide turns,” followed by price strength in the second half as “Asian buying increasingly dominates — giving rise to a 4% rise for the year.”
They said they expect 2014 to be a “Goldilocks year — not too hot and not too cold,” with prices averaging $1,274 an ounce for the year and touching a high of $1,350 and a low of $1,180. Several big banks have also offered their forecasts for 2014 , including HSBC and MKS.
“The biggest passion killer for gold is likely to remain prevailing U.S. dollar strength plus rising interest rates,” Sharps Pixley analysts said. “The consensus for gold at this time seems to be robustly bearish, which for contrarians is a positive sign.
Analysts at Goldman Sachs said they see “further downside for gold prices for 2014 with an end-of-year target of $1,050 an ounce.”
But the path for gold will be “more of a slow grind lower over the course of the year, unlike last year, as markets gain confidence in the belief that the U.S. economy can reach escape velocity to allow the U.S. Federal Reserve to continue to reduce the accommodative monetary policy,” they said.