(MENAFN- ProactiveInvestors) Gold heads into a new year at a little below the price it started the old one.
While a small loss is nothing to crow about for a commodity tipped by many to struggle badly it is almost a respectable performance especially after the 28% price slide the previous year.
Early predictions were for more of the same but though many of the headwinds that tripped up the price in 2013 did resurface so did growing global uncertainties.
Indeed it was almost a classic year of two halves. A good performance early on as the Chinese consumer continued to buy and Ukraine flared up eventually gave way to a surge in the value of the US dollar.
At US$1180 the price is about 3% lower than the start of the year.
Gold and the US currency enjoy a symbiotic relationship with one the traditional counter to the other and the dollar’s relentless rise towards the end of 2014 put sustained pressure on the price of the metal.
According to Commerzbank: “The US dollar appreciated significantly after the US economy picked up again after making a weak start to the year and there was speculation on the market about when the US Federal Reserve would end its bond purchasing programme (QE3) and raise interest rates.”
One feature of the gold market this year however has been how its performance has differed between locations.
Fans suggest this is what gold is for to act as a protection against devaluation of paper currencies due to inflation and excessive money printing by central banks.
On that basis they argue gold did its job very well in 2014.
Shortly before the end of the year the price in sterling was about 5% higher against the yen and euro the gains were in double figures while the rouble price at one point was over 80% higher.
Gold also is seen as a wealth preserver when inflation is strong but falling prices were the greater concern for many central banks in 2014.
The weakness in the oil price towards the end of the year added to the deflationary concerns and meant gold also had to contend with soaring US equity markets as investors calculated the windfall benefit.
The problem is that many of these headwinds seem set to continue blowing at least as strongly in the first half of 2015.
And this has convinced many commentators that as soon as the US Federal Reserve does start to raise interest rates gold will fall again.
Goldman Sachs has been arguing this point for more than 12 months and expects the price to test US$1000 per ounce once the US recovery prompts the Fed to act.
Plenty of other predictions see gold around that mark though there are relatively bullish forecasters out there as well and possibly even a few more than 12 months ago
“The potential for a recovery in prices through 2015 is much better than it was this year despite the expected liftoff of the US Fed Funds rate” says ANZ Bank.
“We expect gold prices to rise steadily through 2015 and end the year at $1280 an ounce.”
It expects Indian and Chinese consumer demand will come through much more strongly in 2015 than in 2014.
The Indian government for example recently relaxed a chunk of its import restrictions.
The dollar’s run may also come to a halt in the second half of the year when the eurozone is being tipped by many to pick up again.
A weaker dollar would take away what has been a major drag on the price this year.
Whether it’s the bulls or bears that prove more accurate remains to be seen but gold has shown resilience in 2014 and if global events become more uncertain its safe haven appeal will undoubtedly come to the fore again.
For the miners a year of retrenchment and cost-cutting looks set to be followed by more of the same in 2015.
() was the stand-out performer on pretty well every metric but the Africa-focused miner has long made a virtue of the fact it basis its projects on a price of US$1000 per ounce.
This year a few brokers have suggested Acacia Mining (LON:ACA) as worth a look with the new name indicative of the changes underway at the former .
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