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Roubini Could Be Right As Kitco Survey Doesn't Rule Out $1,000 Gold

By Kitco News
Friday December 19, 2014 12:48 PM

(Kitco News) - With gold ushering in the new year at around the $1,200 mark, analysts are questioning whether or not one famed economist’s call for $1,000 gold in 2015 may be accurate.

Before taking a holiday break to revamp the popular weekly gold survey, Kitco News asked its survey participants one final question: Could Nouriel Roubini’s call for $1,000 gold be right in 2015?

Kitco Gold SurveyOut of 30 participants, 10 responded this week and of those, the majority thinks that Dr. Doom might be right and the yellow metal could fall to $1000 an ounce in 2015. Only three analysts said that they don’t expect gold prices to drop that low.

Colin Cieszynski, senior market analyst at CMC Markets, said he doesn’t see prices falling to $1,000 an ounce because Europe looks like it will face a new economic crisis that will create safe-haven demand for gold.

“The two-year honeymoon period for Europe looks to be over,” he said. “You never want to say never but I think it is unlikely that gold will fall to $1,000 next year.”

US Global Investor’s CEO Frank Holmes said Roubini’s call may be right because this level is “within the normal DNA of volatility of gold.” He added that the strong U.S. dollar would cause “prevailing pressure” on gold prices next year.

More survey participants said it is possible for gold to reach $1,000 given that the metal continues to trade below the 200-day moving average of $1,268.

Adam Button, currency analyst at Forexlive.com, said the Russian central bank may even decide to start selling its gold reserves next year in order to support the country’s tumbling currency, which would add pressure to gold prices. The ruble has fallen 45% against the dollar so far this year, experiencing its steepest declines earlier this week.

On the other hand, Axel Merk of Merk Investments said he thinks the only scenario where Roubini’s call could be right is if investors see a “very hawkish” Federal Reserve, adding that he does not think rate hikes would equate to a hawkish Fed.

“I think it was Goldman Sachs that had said long ago that they think gold is going to be $1000. If you speak to that analyst, even that fellow thinks long term gold is going to do much better, they just think that short-term it’s going to plunge down to 1000,” Merk said.

“I’d rather call for a stock market crash than for gold to be at $1,000,” he added.

By Sarah Benali and Neils Christensen of Kitco News; sbenali@kitco.com, nchristensen@kitco.com



Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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