Each weekday, Cash4Gold will troll through the web's gold banter and post some of the bigger or more interesting stories. Following is a run-down of today's features:
"Gold futures fall after weak retail sales, PPI"
Author: Moming Zhou
Main Points: Gold for June delivery fell $3.80 to finish at $892 an ounce today, cutting into yesterday's $12.50 gain.
The drop in gold can be attributed to reports that have come out in the past 24 hours. Goldman Sachs Group Inc. reported yesterday that profit and revenue were up in the first quarter. This follows preliminarily positive results from Wells Fargo a week ago. More first quarter announcements are coming this week.
"Ostensibly positive news from the financials has lifted [stock] markets in recent days," said Mark O'Byrne, executive director at Gold and Silver Investments.
Gold, which typically thrives on poor financial news, will likely continue to suffer with more good news from financial companies.
Meanwhile, it was reported that US retail sales are down 1.1% after two months of gains. Wholesale inflation also fell more than expected after two months of gains, as the Producer Price Index dropped 1.2%, driven largely by a drop in energy prices. Gold, often seen as a hedge against inflation, therefore loses some appeal among investors.
"Further resistance [in gold prices] is expected at $900," said James Moore, a precious metals analyst at TheBullionDesk.com. "With ETF investment demand still slow, further significant gains may be curtailed."
Analysis: Good news continues to come in from Wall Street, but investors stress caution considering much of the positive results are coming from financial companies that are directly benefiting from the economic stimulus. The true test will be whether companies not receiving stimulus money succeed and companies that do receive stimulus money continue to succeed throughout the year.
"FACTBOX-Revisions to precious metals price forecasts"
Author: Jan Harvey
Main Points: We've covered updated projections for the price of gold in the past as they come in, but ForexPros had a nice piece today that compiled projections dating back to February 18. Much easier to set reasonable expectations when taken together.
JPMORGAN (APRIL 8): Raised projected 2009 gold price to $960 an ounce from $831; 2010 forecasts to $950 from $825.
BARCLAYS CAPITAL (MAR 20): Raised its 2009 gold forecast to $940 an ounce; they expect gold to hit $905 in the second quarter, $950 in the third and $980 in the fourth.
BNP PARIBAS (MAR 11): Sees a rather volatile year, but finishing strong. $905 in the first quarter, $860 in the second, $865 in the third and $970 in the fourth, for a $900 an ounce average. They site struggling retail demand for gold as a reason for the delayed rise.
NUMIS SECURITIES (MAR 12): Increased its projection from $700 to $900 an ounce average for 2009; also increased 2010 and 2011 projections to $850.
UBS (FEB 23): Increased their one-month forecast to $1,050 from $900 and three-month forecast from $900 to $1,100. Looks like their original one month projection was spot on.
STANDARD BANK (FEB 19): Projected a $940 average over 2009; $1,000 for one month, $950 for three months, and $1,050 for six months. Their one month projection was off significantly, which likely changes the annual outlook.
RBC CAPITAL MARKETS (FEB 19): One of the more conservative predictions, RBC projected gold at $850 an ounce for 2009 and $875 for 2010.
CANACCORD ADAMS (FEB 18): Projected a $975 average for 2009 and peak price of $1,100, up from their original projection of $950. Likely influenced by the Feb. 20 high that pushed the gold price a shade over $1,000.
Analysis: Let's break this down a little more.
Highest projection for 2009: $975 (Canaccord Adams)
Lowest projection for 2009: $850 (RBC Capital Markets)
Average Projection for 2009: $923.57
Even if you remove the outliers, the average is about $928 an ounce. Regardless, it goes to show that the general expert opinion is rather conservative. Gold may rise some, but don't expect an average much higher than $925 an ounce for 2009. In other words, if you need money for your gold, no need to keep waiting for a gold spike.