20% gold value drop predicted

In 2013 we witnessed a 30% fall in gold prices, making it the loser of the year, par excellence.

Since the beginning of 2014, though, the value of the precious metal has increased by 10%.

Nevertheless, because of the unstable political conditions Ukraine is struggling with together with the Chinese and American economical fluctuations, most commodities analysts on Wall Street remain reserved about making prediction that concern a raise in value for gold.

Goldman Sachs, in a new note to clients, repeated their prediction that gold prices will fall within the next 12 months to $1,050/oz.

The reasons stated to be causing this fall in value are: a slowdown of US economic activity caused by extremely bad weather, high Chinese credit concerns and, ultimately, the escalating tensions in Ukraine.

The excerpt from Goldman Sachs’ note to clients states that ‘we expect a sequential acceleration in both US and Chinese activity, and hence for gold prices to decline, although it may take several weeks to lift uncertainty around this acceleration. Importantly, it would require a significant sustained slowdown in US growth for us to revisit our expectation for lower US gold prices over the next two years. Beyond the acceleration in US activity, signs of sequentially weaker Chinese gold imports could pressure prices in coming months.’