Gold dropped 28 percent last year, its biggest fall in the past 32 years, and it's expected to slide further in 2014, says Dominic Schnider, head of non-traditional asset classes at UBS Wealth Management.
He sees the precious metal slipping to $1,050 an ounce in 2014. That would represent a 14 percent decline from spot gold's level of $1,230.10 Friday morning.
"For investors who have gold, it's just going to be an awful year again," Schnider tells
CNBC.
Editor's Note: Get Tom Luongo's Gold Stock Adviser — Click Here Now!
Federal Reserve policy will be bearish for gold, and it goes beyond the Fed's tapering of its bond purchases, he notes. The central bank decided last month to curb them by $10 billion a month.
"People have been talking about taper, but I would really think about rate hikes," Schnider explains. "If you make a 12-month forecast you need to look into 2015, and rate hikes are on the cards."
Rising rates make fixed-income investments more attractive relative to gold and help keep inflation in check. Gold is often viewed as a hedge against inflation.
This year's positive global economic outlook makes risky assets more appealing than gold is, he says.
However, he notes that if you really want to invest in the precious metal, buy physical bullion.
"Stay away from the miners — margins are going to come under pressure, things don't look pretty. If you really want to have gold as an asset of last resort, hold it physically," Schnider argues.
While gold may fall a bit further now, it will reach $7,000 to $9,000 an ounce or possibly higher in the "intermediate" term, thanks to the dollar's weakness, James Rickards, senior managing director of Tangent Capital Partners, tells
Bloomberg.
"That really is the inverse of the collapse of confidence in the dollar," he notes. "The Treasury, the Federal Reserve and other central banks will have to return to gold to restore confidence."
Editor's Note: Get Tom Luongo's Gold Stock Adviser — Click Here Now!
Related Stories:
© 2026 Newsmax Finance. All rights reserved.