The Week In Hindsight 21 February 2014

Gold underwent a brief and mild correction this week before appearing to recoil in preparation for another assault on the $1330 mark. Despite the ongoing resilience of prices here, our outlook for the year remains unchanged.

With the tapering process likely to continue and inflation subdued it is difficult to argue the case for increased demand on a sustainable basis from the west. This is while import restrictions remain in pockets of the developing world.

In addition to this, EM currencies have continued to decline which has resulted in increases to the cost of imports that are likely to eradicate any remaining discount available for emerging market buyers.

For these reasons, it is difficult to imagine any sustainable increase to demand emerging to underpin prices from the developing world. Consensus estimates indicate an expectation for the metal to reach the $1400 level over the near term. Our view remains that such levels continue to represent an attractive opportunity to sell.