Gold Will Trend Higher In 2013
With the Senate approving the fiscal cliff deal, the US seems to have averted another crisis. In response to this news, US equities surged with some upside movement observed in gold as well. This article focuses on the outlook for gold in 2013 and the reasons to believe that the precious metal will trend higher during the year and beyond 2013.
Before I discuss the bullish case for gold, I would like to mention here that I expect gold to correct further from these levels over the next 2-3 months. I had discussed the reasons for believing that gold will correct by 10-15% on one of my earlier articles. With the fiscal cliff crisis averted, the focus will now shift to the debt ceiling issue, corporate earnings and the economic growth data. I did discuss the reasons for believing that corporate earnings will disappoint in the near-term along with the expectation of sluggish economic activity. Also, the next few months will witness another series of debate related to the debt ceiling, which will keep asset markets relatively nervous. These critical factors and concerns will lead to a stronger dollar over the next 2-3 months. As such equity markets, commodities and precious metals will witness some correction. Therefore, I would be slow in taking fresh exposure to any risky asset class and hard assets in the near-term.
For the full year 2013, my outlook for gold is very bullish and I believe that 2013 will be another golden year for the precious metal. Discussed below are the primary reasons for this outlook for the precious metal.