Gold bull market ‘firmly in rear view mirror’: TD – by John Shmuel (National Post – January 22, 2014)

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Gold investors hoping to make up last year’s massive losses may be in for a disappointment as analysts now expect gold prices to stay stagnant over the next couple of years.

TD senior economist Sonya Gulati said gold is likely to spend the next two years “stabilizing” after experiencing a serious rout in 2013. The precious metal declined 28% on the year to US$1,200 an ounce, a far cry from its all-time record of US$1,921.15

“We project that gold prices will stabilize over the next two years, hovering around US$1,175 in 2014, before rebounding to US$1,280 in 2015,” she said. Meanwhile, a Reuters poll released Tuesday shows that the 37 analysts surveyed are forecasting gold will finish 2014 at an average price of US$1,235 an ounce, while essentially remaining unchanged in 2015 at US$1,260 an ounce.

Furthermore, the spread between the highest and lowest forecasts is only half its usual size, which suggests most analysts believe gold prices will be little changed over the next two years, which would be a divergence from the extremes that gold prices have experienced in the past decade. For example, gold rallied more than 70% from December 2008 to August 2011, before crashing 28% last year.

Gold prices fell again Tuesday, with future prices for immediate delivery falling 1.3% to US$1,238.89 an ounce in New York, which is the largest drop since Dec. 30.

Gold’s descent last year was partly due to the U.S. Federal Reserve’s announcement that it would begin scaling back its record bond-buying program, signalling the U.S. economy was showing improvement and no longer needed such substantial stimulus. That sent interest rates upward and put pressure on gold, which some investors view as a hedge against inflation.

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