Gold price prediction: Credit Suisse cuts 2013 and 2014 gold price forecast

Credit Suisse cut its prediction on gold prices for 2013 and 2014, as it expects Asian physical demand for the metal will not compensate for a lack of investment interest in other regions.

The bank cut its average price prediction for gold this year 9.2% to $1,580 a troy ounce and its 2014 average price forecast 12.8% to $1,500/oz.

Credit Suisse said: “While the problems in Europe and, perhaps, concerns about the impact of theU.S.sequester, may keep the metal reasonably well supported during the current quarter, we expect further weakness through the second half of the year,” the
bank said. “By long-term historical standards gold remains overvalued, both in real terms and relative to other commodities and assets.

While the U.S. Federal Reserve looks likely to continue its gold-supportive loose monetary policy for a while, the positive impact of such measures are limited,

“For the time being [such policies] have reduced the prospects of further banking/liquidity crises and tail risks in general. The impetus, therefore, for investors to buy gold (or buy more gold) as a tail risk hedge has diminished,” it said.

Demand for gold in Europe also remains lackluster, despite heightened concerns over the economic situation in the region, and Chinese gold demand is not sufficiently strong to keep gold prices above $1,600/oz, Credit Suisse said.

While gold exchange-traded fund selling may pause in the near-term, “over the longer term there is, we think, a danger that the very visible reduction in ETF positions will become self-reinforcing: outflows affecting sentiment and price, and then leading to further liquidation,” the bank said.

Credit Suisse also cut its 2013 forecast on silver by 11.5% to $28.50/oz and trimmed its 2014 forecast 13.1%. It revised lower its outlook on platinum, copper, aluminum, nickel, lead and zinc, while raising its forecast for palladium prices 2013 and 2014.


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