CHART: Behavioural finance points to $1,050 gold price

Frik Els | April 27, 2017 | 10:02 pm Precious Metals Gold 
Activists, Hollywood take down top 50 mining company
Bullish gold, bearish base metals. Image: The Scott

Frankfurt-based sentix, a leader in the emerging field of behavioural finance, has been compiling sentiment indices since 2001 by surveying more than 4,500 institutional and private investors.

The latest reading of the sentix index of economic expectations spells trouble for the gold price.

Capital Economics, a London-based researcher, in a research note points to this graph to provide support for its prediction that the gold price would be trading at $1,050 an ounce by the end of the year:

The recent rally in the price of gold appears to have been driven by safe-haven buying, as evident from the close relationship between the price of the yellow metal and the Japanese yen, another safe-haven asset. Heightened geopolitical tensions, the triggering of Article 50 in the UK and concerns about the rise of anti-EU parties in the euro-zone have boosted investor interest in gold.

We acknowledge that political tensions could periodically support the price of gold this year. However, we doubt that any gains can be sustained given the prospect of rising US interest rates and the associated appreciation of the dollar that we project. Indeed, we forecast that the price of gold will fall to $1,050 per ounce by end-2017. This appears consistent with market expectations for global economic activity.

CHART: Behavioural finance points to $1,050 gold price

Source: Capital Economics

In a blog post published last week sentix gold sentiment survey among 1,100 retail and institutional investors showed positive sentiment towards gold reaching its highest point for 2017, and the best level since July last year.

Sentix also ascribes the gold bullishness to safe haven buying, but warns that that “overheated” positive sentiment is a contrarian indicator and when greed tops fear in a market to this extent it leads to corrections or top-level forming.

The survey was conducted between 13 and 15 April when gold hit a five-month high within shouting distance of $1,300 an ounce. Late on Thursday, gold for delivery in June was exchanging hands for $1,265 an ounce, down slightly from Wednesday’s close.

CHART: Behavioural finance points to $1,050 gold price

Source: sentix

Mining.com Recommends

15 Comments

  • minedoubt

    I’m no gold bull but shouldn’t market supply-demand factors also be considered in predicting gold price? Gaps between demand (particularly strong demand from India and China) and supply (mined + recycling) have been the major structural drivers of gold prices over the past 10+ years. What percentage of demand does “sentiment” account for, and how does this justify $1050 gold? Somewhat irresponsible article to publish.

  • wags1

    I know of more than one investor who’s lost their shirt when relying on charts. Charts may be interesting components, but aren’t nearly enough to base decisions on.

  • Jan Jee

    WOAH what a big load of crap.

  • Daniel Vermeersch

    Look at CFTC commitments of traders. Producers are heavily short gold futures contracts whereas money managers are heavily long. This is the most bullish reliable indicator you can find. As prices start to move higher again, producers start to reduce their short, which will boost prices much further up.

  • thecharttechnician

    Tentative Bearish Price Objective for the Precious Metal as shown on the chart is at $1045.98.

    Further
    on Gold.

  • thecharttechnician

    Here is the chart with the forecast as shown.

  • Pat Woods

    Facebook: P/E 43
    Chipolte: P/E 144
    Netflix: P/E 200
    Tesla: P/E n.a. (no earnings……)

    Got any Viceroy Tulip Bulbs………..?

    US Public Debt: +$20 Trillion and growing at 2.5% annually
    US GDP: $18.56 Trillion and growing at 0.7% annualized.

    Gold overvalued at $1,265 per ounce…..?

    What am I missing here………?

    Extraordinary Popular Delusions and The Madness of The Crowds………

    Nobody has ever fought a war over a social media posts, a burrito, fantasy of a world filed with electric cars, or an available on-demand TV show.

    At least not yet………….

  • Anton Frost

    Author believes Trump will make America great again lol

  • King Blonde

    Yes, they will sell it’s gold reserves and buy rubles. Or turkeys assets.

  • Theduckwhorocks Rules

    https://goldbugspray.blogspot.com/2017/03/gold-bugs-are-idiots-because-they.html

  • Theduckwhorocks Rules

    http://goldbugspray.blogspot.com/2017/01/still-falling-for-you-r-bullshit-gary.html

    • Theduckwhorocks Rules

      For fans of gary Savage.

  • Fred

    I’m no Goo-Roo! I know the fed will screw U. Bring the price to $1050.00 will be nifty.
    I’ll know what Santa will bring; alot more than a few GOLD RINGS!

  • majorx

    My theory: There is a shortage of real gold in the market which will form the only real protection in the coming collapse. There is a faction trying to panic the current gold holders into selling so they can sop up that gold and transfer the coming losses to the small investors again. I am very suspicious of the motives behind this current promotion of a crash in the gold price.

    • More News