Forecasts for gold still very positive for 2012, but volatility seen too

By Lawrence Williams

“2012 will be a difficult year for all forecasters of commodities, equities, interest rates, etc. – The macroeconomic background will include a recession in Europe, difficult politics in the US (with no certainty that President Obama will not be reelected), and slowing growth in gold’s two largest physical markets – India and China.

Indeed, with slow growth or recession all around - the US economy will remain problematic in 2012 – gold prices will be pulled intermittently lower. 2008 serves as a rough guide in this regard; gold declined some 30% peak-trough in 2008 on the back of the recession.

With gold recently having peaked at $1895 (pm fix) a 30% retracement would put gold below $1400. We think the low for 2012 will be higher than that however.”

So says Martin Murenbeeld Chief Economist at DundeeWealth Economics in an email to Mineweb, prompted by our annual Gold Price Competition. He has a strong record in predicting gold price performance, and this time around has come up with a broad estimate for the yellow metal’s performance in the year ahead given the uncertainty in the markets.