Gold ETP Sales "Will Cut Gold to $1200"

Gold ETP sales to increase, gold prices to fall says SocGen...

 

GOLD PRICES will end 2013 at $1200 per ounce because of increased sales from exchange-traded products, according to analysis from a major investment and bullion bank.

 

Societe Generale analysts sees gold ETF and other investment trust-fund sales continuing to the end of the year, leading the price of bullion to drop to $1200 per ounce.

 

The bank's previous year-end forecast was $1375.

 

"We believe that the dramatic price drop in mid-April was the beginning of the deflation of a bubble," say Michael Haigh, Jesper Dannesboe, and Robin Bhar, pointing to "speculation [that] the US economic recovery will mean less [monetary] stimulus."

 

After falling 15% over the last 4 months to 2,100 tonnes – the worst run since the first exchange-traded product was listed in 2003 – global gold ETP holdings will probably drop 800 tonnes altogether this year, they reckon.

 

The SocGen commodities team see a further 500 tonnes of exchange-traded gold selling in 2014, and "expect continued ETF selling to exceed higher demand for jewelery/bars and coins."

 

That's in contrast to HSBC analyst James Steel, who told Bloomberg last week the rate of gold ETF liquidation is already slowing down.

 

Fellow bullion dealers Standard Bank noted Tuesday that gold's struggling price has come regardless of a weaker US Dollar versus the Euro over the past month.