- Hostage to Headlines
- Facebook Analyst Reports All Over the Map
- More Fallout From the Facebook Fiasco
- Facebook and Morgan Stanley's 99 Problems
- Lousy Economic Numbers, but Stocks Hold Up
- Eurobond Talk: Good News and Bad News
- Hopes Fading for Big Announcement From EU Leaders
- European 'Crisis Tennis' Again
- Facebook IPO 'Conspiracy' Theories Abound
- OK, Facebook Is Embarrassing
- JPMorgan Sells Good Assets to Offset 'London Whale'
- Glitches Halt New Goldman Trade Platform
- Greece Pours $22.6 Billion Into Its Four Biggest Banks
- Funds Cut Exposure to Euro Zone Banks
- US Markets Will Be Watching Europe—And Jobs Report
- As Irish Head to Polls, ‘No’ Voices Get Louder
- Emerging Markets to Test Lehman Lows on 'Grexit'
- Spain's Debt Costs Near Danger Level: Is Bailout Next?
- Samsung Galaxy S3 Gets Head Start on iPhone
MOST SHARED
- U.S. Winds Down Longer Benefits for the Unemployed
- Emerging Market Stocks to Test Lehman Lows on 'Grexit'
- Europe Markets Seen Edging Higher; Investors Watch Spain
- Shell Puts Alberta Oil Sands Project on the Block
- Funds Cut Exposure to Euro Zone Banks
- Greece to Leave Euro Zone on June 18: Wealth Manager
- Egyptians Torch Shafiq HQ as Vote Triggers Violence
- Fire Kills 19, Mostly children, in Upscale Qatar Mall
- Greece Pours $22.6 Billion Into Four Biggest Banks
- European Firms Plan for Greek Unrest and Euro Exit
MOST POPULAR
HOT ON FACEBOOK
Gold to Fall Below $1,000 By End of Year: Economist
Text Size 
CNBC.com Senior Writer
Strength in the US dollar and stability from the European bailout will take the steam out of gold's recent run and send prices to below $1,000 by year's end, one economics firm says.
 |
Tom Grill | Iconica | Getty Images |
Gold [GCM0
Loading...
()
] broke its record dollar-highs this week but should even be higher considering all of the global economic uncertainty and market turbulence, said Julian Jessop, chief international economist at London-based Capital Economics.
"Gold's recent performance has been impressive and stronger than we had anticipated, but it should perhaps have even been a little better," Jessop wrote in a note to clients. "Widespread fears over public debt, the integrity of policy-making and the health of the financial system should be ideal for an asset whose value is not dependent on the creditworthiness of any government or bank."
But the metal's price ratio against oil [CLM0
Loading...
()
] is actually below the historical average of 17, argues Jessop, who believes the trend shows resistance to gold moving higher.
"The EU rescue package has averted an imminent financial meltdown in the euro-zone, while at the same time the required fiscal tightening will keep inflation subdued," Jessop said. "With global growth and commodity prices also set to fall as the policy stimulus fades in other key economies, including China, gold should lose the support it has gained as an inflation hedge."
Jessop concedes that a short-term move to $1,400 an ounce is possible but will not last. And he offers a contrarian view, at least in the near term, relative to gold's trends.
Meanwhile, gold prices steadied Thursday around $1,235 an ounce, but analysts expect it to extend gains in the coming days as investors look for safety amid global currency weakness and general economic uncertainty.
"I think we could easily see a new record high before the weekend," analyst Walter De Wet at Standard Bank told Reuters, referring to the spot gold price. "But also ...at these levels smaller than usual volumes could push prices higher," he added.
Opposing View:
Data is a real-time snapshot *Data is delayed at least 15 minutes
