Business Monitor International (BMI)’s Commodities team recently updated its five-year price forecasts for gold (and all the other commodities we cover).

Essentially, we see gold prices remaining underpinned by loose global monetary policy conditions over the next 12 months. We expect gold prices to peak around 2014, as by that point investors should increasingly start pricing in a normalisation of US monetary policy (even though we do not expect this until 2016). This anticipation will cause a liquidation of the speculative holdings of gold that have built up in the last few years.

However, we don’t see gold prices collapsing after 2014, and indeed our 2015-2017 forecasts are slightly above consensus. Prices should be held up by the following factors:

• Still loose monetary policy outside the US (e.g. the eurozone and Japan)
• Resurgent traditional physical demand as prices fall (e.g. jewellery in India)
• Continued purchases by emerging market (EM) central banks as a diversification of their holdings away from traditional reserve currencies such as the dollar and euro

Our full gold price forecast, as well as forecasts for a wide range of other commodities, is available to subscribers at Business Monitor Online.

This Week’s Trivia Question

The previous week’s trivia question centred on the 34^th anniversary of the Iranian revolution, and we asked what revolutionary leader Ayatollah Khomeini’s response was when a journalist aboard his flight asked him how he felt about returning from exile to Iran. Khomeini’s response was “hichi” (nothing).

For this week’s question, we stick with the theme of anniversaries. Following the signing of the Paris Peace Accords (40 years ago this week) aimed at ending the Vietnam war, what did the North Vietnamese negotiator refuse to accept? And separately, what major literary work marked its 200^th anniversary this week?

Tags: Commodities, gold, monetary policy, precious metals, price forecasts
Posted in: Commodities, General, Inflation/Deflation
RSSFree email updates