Thursday, December 26, 2013
Gold: Investor sentiment is heavily negative on the asset amid its worst annual performance in over three decades, coupled with the Fed's tapering announcement last week which pushed gold prices close to their 2013 low of around $1,180. Given the fact, contrarians believe that the risks for the coming year are firmly skewed to the upside. According to Capital Economics, the worst of the slump may be over on the fact that the latter half of 2013 was less catastrophic for gold than the first half. Capital Economics added that next year, a re-emergence of euro zone instability could work to boost gold prices as investors turn to safe havens once again. Furthermore, worries over the threat of deflation could see higher gold prices. The final supportive factor will be the recovery in gold demand from emerging economies. India, for example, where a government clampdown on gold imports has quashed demand, could see some relief of these restrictions in 2014, proving a catalyst for a rebound in gold prices.