Societe Generale, a major European bank, has a note out asking whether 2013 will be the first year since 2000 that gold ends the year down, according to Business Insider. In it, they present the bullish and bearish argument in the simplest manner possible, it says.
Let’s take a look at the arguments that will decide the price of gold this year.
Equities stand at their lowest level since 20 years, relative to gold, making the latter less attractive.
The dollar could appreciate and interest rates may rise amid signs of a stronger economic recovery.
Inflation is still under control.
Women walk past the Emirates Diamonds shop at Gold and Diamond Park, a shopping mall specialised in gold and diamond retailing, in Dubai.
Currency wars and renewed monetary easing could push gold higher.
A woman displays a small gold coin next to Europe’s largest gold coin in a shop in Vienna, Austria.
Demand from emerging countries may increase.
Japanese ornamental ‘hina’ dolls, made of pure gold, is unveiled at the Ginza Tanaka store in Tokyo.
In the long run, gold may play a role in the transition to an international currency reserve system.
A woman is reflected on the window of a jewellery shop where gold bangles are on display in Istanbul, Turkey.
The most crucial question, really, is the interest rate one. If real interest rates in the US begin to normalise, gold will likely get crushed, as Goldman Sachs (and others) have pointed out lately, according to Business Insider.