Gold prices on Wednesday suffered through its 10th down day in a row, and plenty of the precious metal’s detractors have been speaking up lately.
The yellow metal might rally again in the future, but not with the same glitter due to competition from bitcoin.
Jeffrey Currie, head of commodities research at Goldman Sachs, has made fresh downbeat comments on gold, predicting it could trade below $1,000 an ounce. August gold was last around $1,093 an ounce in Wednesday trading.
Precious metals are in a structural bear market, not only in gold, but across the commodity complex, as the individual commodity stories are reinforcing to one another, creating a negative feedback loop. With the more positive outlook on the dollar, and with debasement risk starting to fade, the demand to use gold as a diversifying asset against the U.S. dollar becomes less and less important. In a July 8 note, Goldman gave a 12-month target of $1,050 for gold.
Gold’s recent slide has put it at levels last seen more than five years ago.
Elsewhere, Morgan Stanley said that under its worst-case scenario bullion may tumble to $800 an ounce.
To get there requires U.S. policy makers to start raising interest rates, another correction in China’s stock markets and a selldown of reserves by central banks. The metal is more likely to trade at about $1,050 an ounce, according to the bank, which left its 2015 forecast unchanged.
Gold has fallen out of favor with investors as the Federal Reserve prepares to increase borrowing costs, boosting the dollar. Prices could drop below $1,000 an ounce, also according to Standard Chartered. The rout in bullion helped to drag the Bloomberg Commodity Index to the lowest level since 2002 as crude oil and base metals fell.
Gold price for immediate delivery sank to $1,086.18 an ounce on Monday, the lowest level since March 2010, according to Bloomberg generic pricing, and it last traded below $800 in 2008. Morgan Stanley’s 2015 forecast is $1,190.