The Week In Hindsight, 02 January 2014

Steady growth in China throughout 2013 and positive signs for a repeat throughout the year ahead sees base metals demand stable for the time being while indicating strong support for the larger and more diversified mining stocks such as BHP Billiton and Rio Tinto.

Gold rounded off its worst year in nearly three decades this week due to improving investor sentiment and a reduced need for inflationary hedges and crisis insurance.

With the dampeners firmly clamped upon investment demand, many analysts have forecast another downward leg in gold prices throughout 2014.

Societe Generali has forecast a sustained break below $1175 in the New Year while Goldman Sachs expects to see spot prices reach $1050 by Q4 2014.

Gold’s journey throughout 2013

Longer term gold price behavior

Oil prices round out a volatile year; potential upside for Brent into the New Year on global conflicts

Conflict and raised tensions across major supply routes are set to support Brent Crude prices moving into the New Year, against a backdrop of a brighter economic outlook for the global economy leading to expectations of increased demand.

In addition to the ongoing Syrian civil war, violence across South Sudan and port closures in Libya have continued to feed supply concerns throughout December and look set to remain an issue into Q1 2014.

WTI (West Texas Intermediate) has also found support for a correction to the upside as US economic growth forecasts continue to be revised upwards while inventory data for December showed stockpiles being drawn down faster than anticipated. This also indicates strong support for prices at the current levels into Q1 2014.

Brent Crude 2013 with WTI Crude Overlay