Gold moved sideways as investors struggled to understand last week’s decision by the US Federal Reserve to maintain its monetary policy stimulus measures.
Spot gold was up US$1.42 at US$1,322, with sentiment aided by a slight price upgrade from Citigroup, though it still remains cautious over the longer term.
The US broker upgraded its short term forecast due to the delay in tapering last week, but added that any reprieve likely to be short-lived.
Citigroup’s price target for 2014 is now US$1,250, but more forward selling by gold mines will stop the price rising further while tapering of the US bond policy is likely only to have been temporarily postponed.
The broker adds that there might be a rebound of institutional interest in exchange traded funds but also sees this as temporary.
Retail buying has balanced some of the institutional sales this year, but the broker sees China as now being well-stocked while India is being held back by its government’s attempts to curb demand.
Another US broker, Morgan Stanley, expects gold will average $1,200 to $1,350 an ounce in 2014 and also believes that the delay in tapering announced last week may not last long.
“While any further postponement would likely continue to benefit gold prices in the near term, we still think it is just delaying the inevitable.”
UBS, meanwhile, raised its one month bullion price forecast to $1450 from $1250 and for three-months to $1375 from $1350.
Silver rose slightly to US$21.82, while platinum dropped US$7 to US$1,422.
Major movers
Randgold Resources down 76p at 4,600p
Fresnillo down 22p at 1,011p
Anglo American down 21p at 1,570p