* Goldman sees gold at $1,600/oz in 2013 vs $1,810/oz
* Bank cuts 2014 price view to $1,450/oz vs $1,750/oz
* Reiterates call for turn in gold's bull cycle
By Jan Harvey
LONDON, Feb 26 Goldman Sachs cut its 2013
gold price forecast to $1,600 an ounce from $1,810 an ounce,
saying the metal's recent price drop and an increase in U.S.
real interest rates have led it to bring forward its projections
for a decline in the metal.
If that projection proves accurate, it will mark the first
year gold has recorded a lower average price year-on-year since
2001, when its record-breaking 12-year bull run began.
"Gold prices sold off sharply over the past two weeks,
extending the decline that started last October," the bank said
in a note dated Feb. 25.
"Most of this price decline has coincided with a gradual
increase in U.S. real rates, reflecting the combination of
better-than-expected U.S. economic data, a more hawkish
interpretation of recent Fed communication and a lower level of
U.S. fiscal and European sovereign risks."
"Net, these moves in gold and real rates have anticipated
the turn in the gold cycle that we had expected for the second
half of 2013."
Goldman predicted a turn in gold's bull cycle in December,
saying a rise in real interest rates on the back of improved
growth could offset any further balance sheet expansion from the
The bank also cut its 2014 forecast to $1,450 an ounce from
$1,750 an ounce. It reduced its three-month price view to $1,615
an ounce from $1,825 an ounce, its six-month forecast to $1,600
from $1,805, and its 12-month view to $1,550 from $1,800.
Gold prices have fallen nearly 5 percent this year,
touching a seven-month low last week of $1,554.49 an ounce after
minutes of the Federal Reserve's last meeting suggested some
officials thought the bank might have to slow or stop buying
bonds even before a pick-up in hiring.
"The decline in prices since last fall and our updated
forecast suggests that the turn in the gold price cycle is
likely already underway," Goldman said. "As a result, although
our U.S. economic forecasts point to modest near-term upside to
gold prices, we believe that a sharp recovery in prices to our
previous price forecast is unlikely."
"In fact, we suspect that if indeed our forecast for further
declines in gold prices proves correct, the fall in prices could
end up being faster and larger than we expect as net long
positions across COMEX futures and ETFs remain near their record