No bubble on the gold market

via Commerzbank

In mid-April, gold suffered the sharpest daily decline in more than 30 years. Some market observers argue that the bubble has burst. We have compared the current gold price trend with previous bubbles and argue against the view of bubble formation. The fundamental environment of ultra-loose monetary policy, low real interest rates and the threat of a global depreciation race continue to speak for a rising gold price. Furthermore, the prices of silver, platinum and palladium, which have likewise fallen sharply recently, should pick up again in the course of the year.
Gold: The fundamental environment continues to be positive for gold even after the price slump. However, it might take some time before gold goes on a new uptrend. Over a three-month horizon, we expect gold to stabilise at USD 1,400 per troy ounce. In the second half of the year, investorsā€˜ faith in gold is likely to return gradually. For the fourth quarter, we reckon with an average gold price of USD 1,650 per troy ounce.

Silver/Platinum/Palladium: Other precious metals are being pulled down with gold. We therefore also revise our price forecasts for silver, platinum and palladium downwards, but still expect rising prices in the course of the year. Silver should climb to 30 USD a troy ounce by the end of the year, as it has taken the sharpest plunge of the precious metals and therefore has the greatest potential to recover. We envisage platinum rising to 1,700 USD a troy ounce and palladium climbing to 800 USD a troy ounce.