J.P. Morgan Cazenove slashes gold’s outlook; metal slides

9:48 am by Fiona MacDonald

In the face of the slashed forecast, gold for August delivery fell more than $14 an ounce, and was lately trading down by $10.50 to $1,382.30 an ounce, also hurt by the strength in the U.S. dollar this morning.

Gold’s outlook for the year was cut by $150 per ounce by analysts at J.P. Morgan Cazenove, it was announced Tuesday.

The investment bank lowered its price forecast for the yellow metal from the $1,745 previously expected for 2013 to $1,595 an ounce.

The short term outlook for the commodity was also cut considerably to $1,450 in the second quarter, a loss of 18 per cent, while the outlook for 2015 was also lowered to $1,650 an ounce, a drop of five per cent.

The recalculated figures come only a few weeks after J.P.Morgan Cazenove’s Allan Cooke, Steve Shepherd and Abhishek Tiwari signalled their faith in the yellow metal, posting that it would average $1,600 an ounce this year to trade near $1,700 by the end of year, a level it was pegged to maintain through the next calendar year, although even that forecast was down on the prior outlook of $1,800 an ounce.

The lowered outlook was accompanied by news that the forecasts for most other metals were also being cut: copper’s outlook for the year was cut to $3.50 a pound, a 4 per cent drop, or $7,707 per tonne, down from the previous forecast of $8,032 per tonne. Silver was also cut, with the outlook for the precious metal for the year now at $27.89 an ounce from $30.01 an ounce previously.

In the face of the slashed forecast, gold for August delivery fell more than $14 an ounce, and was lately trading down by $10.50 to $1,382.30 an ounce, also hurt by the strength in the U.S. dollar this morning.

Silver also suffered, losing more than 26 cents an ounce for the most active market, July, from a prior settle of $22.496. Copper, however, gained slightly, with the most active market, July, gaining over a penny per pound from a prior settle of $3.29.

The lowered outlook comes at a tumultuous time for the precious metal, subject of a massive market correction in April from which it has struggled to recover. For the year so far, gold is down about 17 per cent.

Hit especially hard by the slide in gold’s fortunes are miners already beset by worry that the metal will drop below the cost of producing it, thus requiring operations to be scaled back, mines to be shut down, and workers to be laid off.

Shares in Barrick Gold (TSE:ABX) (NYSE: ABX), one of the world’s largest gold producers, were flat this morning, trading from an open of $19.01 on the NYSE to lose a penny early in the day and rise as high as $19.12 per share.

Another gold giant, Goldcorp (TSE: G) (NYSE: GG), was slightly down, trading from an open of $26.65 per share to as low as $26.53 and as high as $26.71 per share in early deals on the NYSE.

Newmont Mining Corporation (TSE: NMC) (NYSE: NEM) was also trading flat on the NYSE going from an open of $31.79 to as low as $31.52 per share and as high as $31.93 in morning trading.