Gold & Silver Mining report predicts "further weakness" in prices.
A new Gold & Silver Mining Focus report by London-based consultancy firm Metals Focus suggests gold and silver prices will continue to decline over the next year, falling to $1,100 (£650) and $20 (£11.81) per ounce.
According to research, gold prices rose by 16% to a six month high of $1,392 (£822) in mid-March 2014. Investor sentiment was given an additional boost by rumours of the potential for Indian gold import restrictions to be eased.
Looking ahead to the rest of the year, the Metals Focus report explains: “We see 2014 as a year of consolidation for gold prices. This is reflected in our projected trading range, the upper end of which is at $1,375oz (£813), indicating that we may have already seen the high for the year.”
However, the company predicts “further weakness” in the price of gold and refuses to rule out a brief drop to around $1,100 (£649), despite demand increasing over the next 12 months.
This follows a difficult 2013 for the price of gold, with prices falling to a low of $1,180oz (£696) in June. Metals Focus also recorded a 6% fall in total supply despite the fact that demand rose by 17% overall. Some of these losses, however, were offset by continued growth in mine production, which reached a new all-time high in 2013.
Although supply and demand conditions were good for silver in 2014, Metals Focus predicts a difficult year for the precious metal ahead.
The report highlights: “Specifically, global supply is expected to rise by around 2%, compared with a 4% drop in world silver demand. The most significant change, on either side of balance, is expected in physical investment, which is forecast to drop by around 11%.”
Solid growth is also expected from jewellery and silverware, with jewellery expected to grow by around 4%.
For the rest of 2014, the price of silver is expected to fall short of $20 per ounce as physical investment declines.