Challenging macro-economic conditions are likely to drive gold prices lower in 2014, commodity specialists at Bank of America Merrill Lynch and Credit Suisse say, and both banks agree the precious metal could test the US$1,000 per oz level before the year is out. Bank of America Merrill Lynch forecasts gold will average US$1,150 per oz. this year, while Credit Suisse says the average will be closer to US$1,080 per oz.
Rising U.S. 10-year treasury yields and subdued inflation sum up the essence of the economic headwinds facing gold this year, Bank of America Merrill Lynch says in its report published Jan. 9. Researchers at the bank also contend that investors, who have been marginal buyers in recent years, are likely to continue reducing their exposure to gold at the same time as demand for physical gold from buyers in China and India (import restrictions in the latter are in place to ease New Delhi's current account deficit) will likely "not be strong enough to stop prices from falling further."
The good news, they say, is that gold could bottom out this year …
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