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.
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.
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.
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:-
Forecasted Gold Rate in Ounce
Converted Rate per 10 gm in Rs/-
|Thomson Reuters GFMS||2000 $||33890 Rs/-||2013|
|Morgan Stanley||2175 $||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.