2014 was not a good year for gold, or rather the last period was not good. In fact, up until the fourth quarter, the price had not done too badly touching 1,350 dollars an ounce in March after the Ukraine crisis. It started going down in September due to variety of factors: the end of the Federal Reserve's Quantitative Easing, the strength of the dollar, the Swiss referendum's increasing gold reserves at the central bank, the collapse of imports in India.
What is the future of this precious metal? The VI+Daily VicenzaOro January 2015 published some forecasts offered by analysts.
Economist Martin Murenbeeld, who predicted an average gold price of $1,335 last September, now forecasts that the price will fluctuate around $1,202 in the first quarter and around $1,227 in the last, reaching $1,311 in 2016.
The Chief Economist of the Dundee Capital Markets has identified some bearish factors that are generating the current turbulence: the stability of the dollar, the stagnant world economy, the increasing strength of stock markets and investors' excess gold reserves. Elements that could be compensated by a constantly expanding Asian demand and by the omnipresent geopolitical tensions, given that, when there are huge crises (we had proof of one last March with the crisis in Ukraine), the price of gold tends to soar.
Not everyone is in agreement, at least in terms of numbers Goldman Sachs, Barclays and Societe Generale sustain that gold is destined to fall, maybe even to $1,330 an ounce, but at the lowest levels, demand from hoarders will reappear with a certain strength and above all from Asian buyers which will breathe new life into the price. These are just forecasts. In fact, the price of gold continues to rise, bringing a smile to investors' face.
In 2015, Russia will increase gold production up to 300 tons.
This will happen primarily due to the development of gold deposits in the Far East and in Southern Siberia. Russian gold production has increased markedly in 2014 and is scheduled to grow.
By the end of 2014, Russia produced 272 tons of gold, according to Thomson Reuters GFMS. Thus, Russia is second only to China (465.7 tons) and ranks second in the world in terms of gold. Gold production increased by 9% compared with 2013.
As reported by Infomonitor Rusmet.ru, global production of gold in 2014 increased by 2%, while total supply in the market, taking into account recycled gold, did not change much. Demand for gold in 2014 was 4.041 tons (123 million ounces), which a decline of 18.7%, according to GFMS. Demand from the jewelry industry decreased by 10.5%, the Central Bank purchases went up by 12.7%, industrial demand fell by 4.7%, investment demand fell by 40.1%.
The movement of gold prices on the London Stock Exchange was mixed in 2014. In March 2014, gold registered a maximum monthly average value of $1,336.08 per ounce, falling down in value from April to June. In June, its price bounced by 2.5%, after which it went into a new recession.
The value of gold is partly influenced by central banks purchasing the metal. In particular, the Central Bank of the Russian Federation increased its share of gold in the country’s foreign exchange reserves in 2014. As of November 2014, the Central Bank of the Russian Federation accounted for 1/3 of the entire amount of gold purchased by central banks in various countries, which bought a total of 461 tons of gold last year, up 12.7% versus 2013.
The Central Bank of Russia is purchasing gold to decrease the dependence on the US dollar and support the flagging ruble. In the first 11 months of 2014, Russia’s Central Bank bought 152 tons of gold worth a total of $ 6.1 billion.
However, much controversy has arisen, when the State Duma was reviewing a bill to ban the sale of Russian refined gold in ‘standard bars’ weighing 11,000-13,300 grams and in ‘measured bars’ weighing 1-1,000 grams to non-residents and its export from the Russian Federation. Restrictions on the sale of gold abroad can have negative consequences for local gold miners and the Russian budget, as under this bill it is supposed to buy out unclaimed gold, which would require RUB 170 billion per year. Taking into account the current ruble-dollar rate the associated expenses may be about 40% higher than this figure.
However, these are just analytical predictions. Still, gold prices continue to rise bringing a smile to the face of investors.
Veronica Novoselova, Rough&Polished
