According to Goldman Sachs, the acceleration of U.S. economic growth will lead to resumption of decline in gold prices. The multinational investment banking firm reiterated its forecast for the yellow metal to end the year at $1,050 per ounce.
According to the gold analysis report published by analysts led by Jeffrey Currie, gold’s recent rally was spurred by poor U.S. data probably linked to the weather and rising tension in Ukraine. The above factors seem to be transient. With further tapering of the Federal Reserve’s bond-buying program, gold is likely to go to even lower levels.
Goldman Sachs points out that it would require a significant sustained slowdown in US growth to revisit their expectation for lower gold prices over the next two years. Further extension of geopolitical tensions may support gold prices near-term, but sequential acceleration in both US and Chinese activity will drag the yellow metal prices to lower levels.
The report says, despite gains gold could come under pressure in 2014.Three factors- weather-impacted U.S. economic activity, Chinese credit concerns and Ukraine tensions–have pushed gold prices to higher levels recently. As these factors diminish, gold prices may tumble from the current levels.