Sharps Pixley cites expectations of gold drop in wake of Fed decision
London based precious metals broker Sharps Pixley is citing analyst notes from Citigroup and Morgan Stanley, among others, suggesting that the price of gold will continue to drop in the wake of the latest Fed taper decision.
The notes come following the US central bank’s decision not to introduce a tapering of its asset purchase programme, which had been widely expected by the market.
Sharps Pixley cites a report by Bloomberg, which points to both Citigroup and Morgan Stanley analysts suggesting the the price of gold will come under further pressure, because by not tapering its programme, the Fed is giving more stimulus to the US economy for longer.
The average price of gold is now expected to be $1,200-$1,350 or lower through the coming year. Meanwhile, 2013 could be the first year in 13 when gold ends lower.
Bloomberg also cites analysts at Societe General advising that the downward trend in gold is likely to continue.
Part of the challenge lies in the fact the metal is priced in dollars. Growing strength in the dollar will push the price of the metal down, even as demand from regions such as Asia remains significant.