Worst isn't over yet for gold, says Goldman Sachs

NEW DELHI (Scrap Monster): Gold has erased almost all of this year’s gains and looks set for its first quarterly decline in 2014. According to Jeffrey Currie, Head-Commodoties Research Team at Goldman Sachs, the worst is not yet over for gold. The yellow metal is likely to slide down further.

According to Jeffrey, gold had taken much of its support from the political deadlock in Ukraine and geo-political tensions in the Middle East. Having those concerns seems to have faded at least for the time being, gold prices are likely to collapse further. The strengthening US economy has spiked a rally in dollar and stock markets. The S&P 500 index has surged to record highs during this month. Goldman Sachs sees lucid exodus of wealth from gold to other risky assets going forward.

Currie maintained his forecast of gold prices from the start of the year. According to him, gold prices may drop to $1,050 per Oz by end-2014. He added that the rebound seen in the yellow metal during the first half of the year has now come to an end.

Goldman Sachs also believes that inflation concerns are pretty subdued, as of now. Gold will be more responsive to near-term growth in the US economy, rather than long-term inflation concerns.

Meanwhile, Goldman Sachs is not the only investment firm to downgrade gold. Societe Generale, in its latest gold forecast predicts further 5% fall in gold prices by Q3 2015. Earlier this week, Citigroup had lowered its gold price forecast for 2015 from $1,365 per Oz to $1,225 per Oz. Also, UBS had derogated the three-month gold price outlook by nearly 8% to $1,200 per Oz.