Gold: Surveys show short-term optimism

Two recent surveys of the gold market have revealed an optimistic view of the gold market in the short term, tempered by concerns about the resilience of prices into 2013.

An update to the annual Thomson Reuters GFMS Gold Survey, released today, concludes that gold prices may hit the US$2,000/oz mark in late 2012 or early 2013. The report forecasts an average price of US$1,640 for the first half of the year, when prices may be affected by the ongoing Eurozone crisis. However, it argues that low interest rates, raised expectations of inflation, and “a general mistrust of fiat currencies” could drive prices to new heights towards the end of the year.

Philip Klapwijk, global head of metals analytics at Thomson Reuters GFMS, said “We’ve seen a great deal of attention on the Eurozone debt crisis, which has led some to seek out the dollar and US Treasuries as a least bad option. However, the re-emergence of US concerns, in particular any apparent need to adopt [a third round of quantitative easing], could really fire up the gold market.”

The survey’s short-term optimism is echoed in the results of the 2012 Gold Price Report from PricewaterhouseCoopers (PwC), published on January 13. In a survey of producers representing a forecasted 37.75 Moz of 2012 gold production, PwC found that 80% of respondents believed prices would continue to rise through 2012. More than half said they expected the gold price to exceed US$2000 this year.

Looking past 2012, the GFMS report argues that a ten-year growth of price increases will likely begin to recede. “Once the macroeconomic backdrop changes and investment in gold fades (probably some time next year), a secular retreat in the price will unfurl.”

Analysts at Credit Suisse AG have taken a more cautious short-term view, saying today that prices were unlikely to reach US$2,000/oz this year.