“While we remain bearish on gold, escalating geopolitical tensions in Ukraine have offset stronger” signs of growth this year, Goldman Sachs Group Inc. said in a report dated May 13. “We continue to expect a sequential acceleration in U.S. economic activity, and hence for gold prices to decline.”
At the same time, “the uncertain outlook in Ukraine may continue to delay this move lower,” Goldman analysts led by New York-based Jeffrey Currie said in the report. The bank reiterated it expects prices to drop to $1,050 in 12 months.
Soros Fund
Soros Fund Management LLC increased its stake in Barrick Gold Corp, the largest producer, in the first quarter and also bought more shares in the Market Vectors Gold Miners ETP, according to a filing. Michael Vachon, a spokesman for Soros, did not immediately respond to a voice mail and an e-mail.
Bullion climbed 70 percent from December 2008 to June 2011 as the Federal Reserve bought debt and held borrowing costs near zero percent. While the pace of bond buying is slowing, Fed Chair Janet Yellen said May 7 the U.S. economy still requires a “high degree of monetary accommodation,” citing the slowdown in housing as a risk as well as “heightened geopolitical tensions.”
The cost of living in the U.S. rose in April by the most in almost a year, a sign inflation may pick up as demand in the world’s largest economy recovers from a weak first quarter.
“Central banks across the globe have pumped in a lot of money into the system, and that at some point will trigger inflation,” Peter Sorrentino, who helps manage about $3.8 billion at Huntington Asset Advisors in Cincinnati, said in a telephone interview. “We probably could see some momentum players return to the gold market.”