Gold to be hit by 'investor fatigue' : Barclays
The bank also lowered its Q1 forecast to $1,630/oz from the previous $1,710/oz.
Barclays Capital has revised down gold forecast for 2013 by saying "investor fatigue" has capped upside momentum for the metal despite ongoing macroeconomic uncertainty.
The global bank revised down its gold price forecast for 2013 to $1,646/oz from $1,778/oz as it believes downside risks for the yellow metal have increased while upside catalysts have receded.
Analysts said the new forecast, if it proves correct, would make 2013 the first time the average annual gold price has fallen since 2001.
"Physical demand from India and China in part has responded to the lower price environment but the key risk here is continued ETP outflows," Barclays analyst Suki Cooper wrote in a note.
In addition, positive data indicating that the US economy is steadily recovering has weighed upon gold, which thrives in difficult times due to its safe haven properties.
The bank also lowered its Q1 forecast to $1,630/oz from the previous $1,710/oz.
The Barclays downgrade follows that of Goldman Sachs which cut its 12-month gold price forecast to $1,550/oz from $1,800/oz, citing the growing momentum of the US economy and the drop in investment holdings.
Gold ETP holdings have continued to fall after February saw a record outflow with 110t in net redemptions across the 55 products tracked by Barclays.
Net outflows have reached 27t so far in March, according to the bank. Total metal held in trust remains elevated at 2,623t but is 143t off the all-time high. Outflows for the year to date have reached 137t, compared with modest net inflows of 71t.
"There is scope for hefty ETP selling... but outflows have slowed. Here the risk is likely to rise again should yield-bearing assets outperform further," Cooper wrote.
The lower price environment has stimulated demand in China. Volume traded on the Shanghai Gold Exchange has eased from the record high set after the new year holiday but remains elevated, according to Cooper.
However, demand in India has returned to the sidelines despite local prices falling to their lowest level since July 2012. Fresh demand is expected to take place in April ahead of the wedding and festival season.
"We believe prices are likely to encounter rangebound trading, with support coming from the physical market, central bank buying, a low interest rate environment and the risk of medium-term inflation, but they could struggle to gain upward momentum without a new catalyst," Cooper wrote.
The gold price is still above the marginal cost of production plus sustaining capex, according to the analyst. Barclays estimates this cost at $1,200/oz.
Sumber : Google
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