Gold 2013 – What is the trend for the gold price in 2013 and beyond?
Towards the end of 2012 the gold price had increased on an annual basis in each year for a decade. What is the forecast for the gold price 2013 and beyond? Will the 10-year upwards trend of the gold price continue in 2013?A majority of gold investors views gold more as an insurance or store of value than as a means of speculation. These investors therefore regularly take a longer-term view on gold as an investment. What trend of the gold price can we expect in 2013 and for the following years? Gold price forecasts will never be completely accurate, but we collected some information on the key drivers influencing the gold price and analysts’ gold price forecasts for 2013.
Review of Gold in 2012
The gold price started into the year 2012 at US dollars 1,531 per ounce. Over the full year 2011 the price of gold had increased by nearly 9% despite the two dips in September and November/ December. This made 2011 the tenth consecutive year in which the gold price increased.By December 31st, 2012 the gold price has further increased – amid high volatility – to roughly US dollars 1,657, i.e. by more than 8% from the beginning of 2012. In euro terms the price increase was nearly 6% over the same period.
Drivers of the gold price
The gold price is – as the price of any commodity – driven by the basic laws of supply and demand. The demand for gold falls into four sectors: The official sector, i.e. central banks, jewellery, technology, i.e. industrial and dental sectors, and private investment.In 2010 the central banks have developed from net sellers to net buyers of gold, driven by a decrease of sales from developed countries and an increase in buying activity from developing countries. Given the low percentage of central banks asset allocation into gold in emerging countries like China (2% versus about 70% in countries like the United States, Germany and France), there is a solid chance that the official sector will continue to be a net buyer of gold in 2013 and even beyond 2013.
Over the last decade jewellery demand for gold decreased in relation to demand from other sectors, mainly the investment sector. High gold prices and economic uncertainties will likely keep gold demand from jewellery moderate in 2013.
Gold demand for industrial purposes and dental uses accounted for just about 10% of total gold demand in 2011. As for jewellery demand, high prices and potentially low/volatile growth will likely dampen demand for gold for industrial uses in 2013.
Besides jewellery, the demand from the investment sector accounts for more than 40% of total demand. Amidst the money and debt creation by major economies and following the financial crisis, which started in 2007, the demand for gold as an investment reached record highs in 2011. While during the previous gold price peak in the second quarter of 2010 the demand came nearly in equal parts from gold securities like Gold ETF and physical gold in the form of bars and coins, this changed during the latest peak in the third quarter 2011, when nearly 80% of investment demand flowed into physical gold, e.g., in the form of professionally vaulted gold. This indicates that safety is a major concern for gold investors, who usually view physical gold or vaulted gold as more safe than so called ‘paper gold’ (see our comparison of different forms of gold investment).
The second important driver of the gold price in addition to the demand factors is the supply side. The supply of gold is composed of mine supply, i.e. gold production, and gold recycling.
Mine production reached a new high in 2010 and is expected to increase by about 10% until 2013. Gold recycling, i.e. gold scrap, is also on a record level. The high gold price and economic troubles will likely result in a continuously high level of gold scrap in 2013 and potentially beyond.
Scenarios for 2013 and the gold price trend
The overarching driver of the gold price for the year 2013 and beyond will be the development of global financial crisis. The levels of debt piled up by Western governments and often also corporate/private sectors are still not sustainable. There is basically one scenario to get rid of this burden: disciplined deleveraging, i.e. reduction of debts. The alternative, which was pursued over the past years, is to create more debt. This could eventually lead to inflation levels significantly above the inflation rates we saw during the last decade in Western currencies.Either way, both a deleveraging, which will probably be long and painful (‘the lost decade’), or a reduction of the real debt pressures by means of higher inflation will potentially preserve gold as an attractive insurance asset or store of value for many conservative investors in 2013 and beyond. Geopolitical risks, e.g. in relation to Iran, will support this position of gold as a ‘safe haven’ further.
Gold price forecasts 2013
For the fourth quarter of 2013 analysts surveyed by Bloomberg in November 2012 forecasted a level of US dollars 1,925.- per ounce of gold.The bullion bank ScotiaMocatta forecasts a rising gold price in 2013 and would not be surprised to see a gold price above US$ 2,200.- per troy ounce of gold.
The French Bank BNP Paribas estimated in November 2012 gold to reach US dollars 1,675 per ounce in 2012 and US dollars 1,865 per ounce in 2013. On the other hand, Thomson Reuters GFMS expects the peak of the gold price for end of 2012 or beginning of 2013 and a following decrease in the price of gold from 2013 on. In November 2012, members of the London Bullion Market Association forecast a gold price of US dollars 1,843.- by September 2013. The global bank HSBC predicts a very similar gold price of 1,850 US dollars per ounce of gold in 2013.
The CEO of the largest US gold mining company Newmont Mining estimates that the price of gold in 2013 may increase to US dollars 2,550.
In November 2012, Deutsche Bank updated its forecast on the gold price to US$ 2,000.- by next year, i.e. 2013. Credit Suisse expects a gold price of US$ 1,840.- in 2013, while in October 2012 private bank Coutts predicted gold prices to reach US$ 2,000.- in the coming months.
Outlook on Gold 2013 and beyond
The diversity of analyst predictions with regard to the gold price in 2013 and the following years mirrors the uncertainties in the global markets.An interesting fact about gold is that it often performs well in scenarios of deflation (for instance driven by global debt reductions) but also in scenarios with higher than usual inflation rates (which could potentially occur as public debt level increases further).
Gold therefore tends to perform positively in times of economic uncertainties as well as in acute crises. Unfortunately, the global financial problems are not yet sorted out. Some credible commentators expect several more years of uncertainty and painful deleveraging, which could end only when we are approaching the next decade.
Thus, in the foreseeable future a moderate allocation to gold will remain the imperative for many investors and could result in a positive trend of the gold price 2013 and beyond. Portfolio diversification, i.e. the allocation of funds to different asset classes and investments, should remain an imperative for safety-orientated investors over the coming years.
As with every investment, fees are a key performance driver to be considered when investing in gold. Vaulted gold, i.e. gold stored in professional vaults, can offer investors outright gold ownership at reasonable fees combined with high liquidity and safety. Investors would be well advised to compare gold investments.
[Last update: January 6th, 2013]
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21 Comments to Gold 2013 – What is the trend for the gold price in 2013 and beyond?
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i think that gold should have rang bound 1650$ to 1825$ in first and second qtr and also very gambling in 2013.
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Now that the election is over and Barack Obama is our president for the next four years, gold prices will definetly be on the rise.
1.) Captial gains will be going up come Jan 2013 meaning there will be a huge sell off. Stocks will go down gold will go up.
2.) The president is estimated to increase the deficit by another 4 trillion dollars. The bigger our deficit the higher gold will revalue itself.
3.) The president’s spending may cause China to stop investing in the dollar and form a new currency with the Central Banks which would deplete the value of the dollar.
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i agree with Jonathon but not at $1000 an ounce by end of 2013 , maybe around 1200-1400. But there is another section that banks looking to create more oscillation to make more liquidity in the Gold market . So I think the next year will be very interesting as well risky for gold market . we must be ready to see the gold price at the range of $1200 – 2800 an ounce in 2013. Gold market is a gamble in 2013…
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I believe the Gold will not cross the 1800 main resistance till year end 12. Gold will bounce back to level 1840 – 1870 in the begging of next year and then will drop down to 1600 level in the mid of next year. The price in 3 or 4th Quarter 2013 depend on the US unemployment rate and further QE etc which will set the direction for the Gold to either retest 2011 High or to remain Range Bound.
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Look at the predictions early in 2012 they say gold at 2,000 an ounce by years end and they are ALL WRONG .. with the govt of the US back into office the ptrediction now is a massive depression mid to late 2013 due to unemployment production falling off and deficit in the clouds, Strangely gold prices will fall because of lack of money and no buyers ..gold will be at 1000 an ounce by end of 2013.
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“A sale of the reserves would have no significant impact on the public debt of the United States but further undermine trust in the U.S. Dollar.”
At today’s prices. A statement by central banks that they stand ready to buy gold at $60,000/oz would take that 3% coverage to 100% coverage and balance the CB balance sheet. The treasury and central bank can then net out the difference, and reset to zero.
There are few immediate consequences* to this action as gold is not use for any useful purpose in society.
* Besides not resolving the root cause.
This is the likely resolution to the problem as it’s the past of least resistance. I expect this to as the ‘next line of defense’ in a Lehman type event in the future.
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In light of the fall of the PIIGS, i think, gold price will stabilise at around USD 1800, and will start to reach USD 1900 once Spain declare that it needs financial help from the EU.
The China argument is interesting. But i think China is embracing capitalism so much that it just want to create wealth no matter what, holding wealth values (i.e commodities) are last in their minds.
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Gold price forecasts for 2011 through 2013 were recently reduced by troubled French Bank, BNP Paribas , following the recent volatility in gold price valuations. In the near term, a further correction in the gold price may be warranted with physical gold sales and investment redemptions being realized to offset losses in other asset classes. Over a medium to longer term investment horizon, Precious Metals Research Analyst Anne-Laure Tremblay remains optimistic, “We see the gold price peaking in 2013, as the market starts to anticipate monetary tightening in the United States, but do not expect a sharp fall thereafter.” BNP Paribas reduced its near term outlook on gold prices to average $1,730 per troy ounce in the fourth quarter, down from its earlier estimate of $2,170 per troy ounce and further reducing its target 2012 gold price forecast to $1,950 per troy ounce.
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After the open ended (QE3) programme, I believe most of these forecasts need to be reviewed higher
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Good boy Chris, you tell him! The average debt per US person is $51,000 and rising. This includes the children, elderly, disabled and unemployed. There is no way we’re paying this off. This can be ignored or addressed.
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@Trustable Gold
…and to add to the precious argument: A large share of the US currency reserves is held in gold (approx. 75%), but the total holdings have a worth of just about US$ 350 billion. US public debt in comparison is above US$ 10 trillion. The gold reserves only amount to about 3% of public debt.
A sale of the reserves would have no significant impact on the public debt of the United States but further undermine trust in the U.S. Dollar.
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@Ysuf Ayaz
If China is to say they are not buying US T. Notes anymore, then wont the US need to liquidate their Gold (which is 70% of their savings?) to pay of their debt? In that case, wont the Gold price rally down? China has invested only 2% into Gold. If the price rallies down, China would keep buying it until it empties US and then it would dominate to increase the prices. Does it make sense?
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It is not the gold increasing in value, it is the paper money being watered down.
Gold is a unit of measure which does not change, it is our promissory notes (paper money) losing their credibility.
All it takes is China to say “I am not buying US T. notes anymore because I do not believe they can ever pay it back”
Then watch the gold prices taking off…
This scenario would hurt China as well simply because they have enermous amount of US dollars but it would have a devastating effect on US economy…
Just my two cents…
Y.
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The Canadian investor Eric Sprott has predicted a gold price above USD 2,000 in 2012. Based on the problems of MF Global he believes, (option for) physical delivery to become more important for investors.
