Gold Price Prospective 2013 and beyond

Gold Price

Gold, the shining yellow metal has proven to be a safe haven investment option for everyone not only because of it being a hedge against inflation, but also due to gold investments have historically shown a low correlation with investments in other asset classes such as stocks or shares, mutual funds, government and corporate bonds and even commodities and other precious metals.

If we see history gold has provided 16.91 % annualized return over the past 10 years. In last 5 years since 2008 the gold prices have risen nearly 125% (Rs. 12500/- to Rs. 28000/-) making a strong case for having it in your portfolio. The percentage allocation to gold should depend on an investor’s risk and return objectives.

Before talking about future return of gold let us look at historical graph given below which shows gold has given continuous appreciation over the decades.

Gold Price History

This is because “As fewer and fewer people have confidence in paper money as store of value, the price of gold will continue to rise.”

You might have following question in your mind:-

• Will the upwards trend of the gold price continue in 2013 and beyond?

• What we can expect from gold in 2013 and following years?

In this post we will address gold price prospective 2013 and beyond. In order to forecast this we have collected various data & information from various agencies. This forecast is for giving you overview about future gold price we cannot assure that this will be completely accurate.

Gold price trend 2013 and beyond:-

Trend in terms of supply & demand of Gold:-

Like all other commodity Gold price are also driven by basic rule of supply and demand. Demand of gold is categorized mostly in four sector i.e Reserve bank (central bank), jewelry, industrial & investment.

In most of country reserve bank is adopting approach to buying gold continuously, we hope this trend will be continue in 2013 and beyond.

Over the last decade jewelry demand for gold decreased in relation to demand from other sectors, mainly the investment sector. High gold prices and economic uncertainties will likely keep gold demand from jewelry moderate in 2013.

Gold Distribution

Besides jewelry, we have seen major boost of adopting gold as investment this may be due to availability of various investment options like Gold ETF, Paper Gold etc. This investment boost is likely to continue.

Industrial demand for gold in 2011 was 10% of total demand and due to higher price demand in this sector likely to get reduced.

In addition to demand side supply side is also important for deciding trend. Gold production by mining reached a new high in 2010 and is expected to increase by about 10% until 2013.

Trend in terms of Global Financial Situation:-

Other governing factor for gold price in 2013 and beyond will be global financial situation. Global financial situation is not so good today, level of debt taken by western countries are not sustainable. They are trying hard to improve financial situation either by taking more debt or by reducing current debts. Eventually this situation is causing significant rise in inflation rates & rise in value of western currencies.

In the long run, the gold price has to go up in relation to paper money, there is no other way. To what price, that depends on the scale of the inflation – and we know that inflation will continue.

Gold price forecasts 2013:-

Forecast by

Forecasted Gold Rate in Ounce

Converted Rate per 10 gm in Rs/-

Year

 Thomson Reuters GFMS 2000 $33890 Rs/-2013
Morgan Stanley2175 $36856 Rs/-2013
 Newmont Mining 2500 $42363 Rs/-2013
Standard Chartered 2000 $33890 Rs/-2013
Standard Chartered 2107 $35703 Rs/-2014

Some forecast may seem to be speculations but one thing is for sure that from here gold price are intended to appreciate more. This may be due to economic uncertainties, unfortunately the global financial problems are not yet sorted out, you might have heard about bad financial situation about Europe and other western countries. This may cause gold price to rise further. So, looking at global demand and other economic factors gold price will continue to rock in 2013 & beyond. Invest in gold today for brighter tomorrow. Gold will set record high in future but when that time will only show us.

 

15 Comments

  1. Rajan says:

    Sir,

    When would the rupee appreciate and what low levels it would remain consistent and at that time what would be the levels of gold in rupee terms?Awaiting reply at the earliest.

    Regs,

    Kamalam.

  2. Dear Rajan,

    As describe in our article on same day 31st Aug,2012 :-

    http://moneyexcel.com/1913/gold-bullishness-will-last-in-future

    We have describe that:-

    Due to slowdown in economic condition it is quite possible that government of various countries will take steps to increase liquidity in market. These steps will further boost gold price.

    Same thing has happen to give driving force to economy of America FED has taken decision to purchase more bond and it is likely that they will print more dollar to boost liqudity in market which may cause overall reduction in dollar price.

    Due to this news gold price has shown sudden rise.Europe ECB may take same type of step.

    As per me correction expectation in gold price is 5-7% by Dec-2012.

    If you want to invest for long term invest in multiple block regularly by GOLD ETF. For short term it is not advisable to enter at this level.

  3. Strategic Growth says:

    Dear Rajan,

    Price of gold has reached at 31000 Rs / 10 gms. Gold price is increasing due to euro zone debt condition & slow down in world economy. Most of hedge funds and investor invest in gold at this moment as they consider gold as safe asset class in economic crisis situation.

    If we apply simple supply and demand formula for gold, than price of gold will increases if supply is less and demand is more.

    Now If We look at gold demand of India in current situation, than demand of gold is decreased by 51% in second quarter of 2012. Gold demand was 115 ton in second quarter of 2011 while same is reduced to 56.5 ton in second quarter of 2012. Even if you see jewellery demand in gold is also reduce by 30%.

    This reduction in demand in local market is due to high price, bad monsoon, inflation & no marriage season.

    If you see total world consumption than it is also affected by 10-15% compare to previous year.

    Apart from this Global Economic slowdown started in 2007 (five year before) still it is continue in 2012, but I feel that this slow down will end by end of 2012 or by early 2013.

    I think this factors of demand and economic condition will cause reduction in gold price & gold may touch 28500 Rs/ 10 gms by Dec,2012.

    But I would like to tell you that instead of purchasing physical gold you should buy GOLD ETF at various Interval.

    • Rajan says:

      Dear sir,

      After FED Chairman Ben bernanake’s speech on 31-08-12 gold has suddenly increased from 30500 Rs\10gms to 31500 Rs\10gms in a day.Please clearly explain in simple words about ben bernanke speech and by what means it affected gold rates and what would be the gold rates in coming days and months and years from hereon from the outcome of his speech.And what does Europe’s ECB going to do on their coming important meeting and how it would affect the gold rates in coming months?Awaiting your clear feedback at the earliest.

      Regs,

      Rajan.

  4. Strategic Growth says:

    Dear Rajan,

    God is trading nearly above 30,000 Rs/- Currently price seems to be at higher side and it is not good time to make investment if you are looking for short term.

    Gold may correct up to level of 28,500 Rs/- looking at various factors.

    We feel that if you are thinking of investing in gold you should buy gold ETF at different intervals. This will cause averaging effect of gold price in your portfolio.

    We will surely keep you updated about gold price.

    Thanks for visiting

    • Rajan says:

      Dear sir,

      You mailed me on August 25th that to wait to invest in physical gold (planning to buy 300 gms) when it comes down to 28500 Rs\10gms levels,but the current scenario seems to be that gold will go up and up from current 31000 Rs\10gms levels due to QE3 from US FED as some other analyst says.I was waiting from levels of 27000 Rs\10gms to invest but at that time also some analyst said gold will come down to 24000 Rs\10gms levels,but since then gold has moved up gradually and now it has reached 31000 Rs\10gms.At what approximate date in near future the gold rate will come down to 28500 Rs\10gms and what are the reasons for it to come down as per your predictions?Awaiting your reply.

      Thanx and regards,
      D.Rajan.

  5. Rajan says:

    Please update me regularly about gold prices and highlight the right time to buy during
    the rock bottom support price.

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