LONDON: Goldman Sachs cut its 2013 gold price forecast to $1,600 an ounce from $1,810 an ounce, saying the metal's recent price drop and an increase in US real interest rates has led it to bring forward its projections for a decline in the metal.
The bank also cut its 2014 forecast to $1,450 an ounce from $1,750 an ounce. It reduced its three-month price view to $1,615 an ounce from $1,825 an ounce, its six-month forecast to $1,600 from $1,805, and its 12-month view to $1,550 from $1,800.
"Gold prices sold off sharply over the past two weeks, extending the decline that started last October," the bank said in a note dated Feb. 25.
"Most of this price decline has coincided with a gradual increase in US real rates, reflecting the combination of better-than-expected US economic data, a more hawkish interpretation of recent Fed communication and a lower level of US fiscal and European sovereign risks."
"Net, these moves in gold and real rates have anticipated the turn in the gold cycle that we had expected for the second half of 2013."
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