Goldman Sachs is out with another piece of research making a bearish call on gold - the piece is entitled "Cold, Crimea, & China: Transient supports to gold prices".

The entire research note can be summarized in 4 charts and a couple of sentences:

Click to enlarge

GS_gold_charts

Goldman is forecasting an acceleration of US economic growth which should in turn lead to higher US real interest rates and strong headwinds for the gold price. GS has posted a $1,050 12-month price target for gold, which if it comes true, would bring gold back to test important support from early-2010.

From our vantage point, Goldman's bearish gold call is unlikely at best and rests on several improbable macroeconomic variables all occurring (or not occurring...) at once:

  • Accelerating US economic growth while emerging markets and China continues to wobble? This is reminiscent of the 'decoupling' we heard a lot about circa 2007-2008
  • Strong growth without rising rates of inflation
  • A 50-100 bps jump in rates not contributing to a significant stock market correction
  • China avoiding a hard landing as it comes back down to earth after two decades of extraordinary economic growth and a massive property bubble (the recent copper decline says otherwise....)
  • The Russia/Ukraine situation de-escalating while other global hot spots remain calm (Syria, Iran, China/Japan, etc.)

As always, Goldman research makes for interesting reading and seemingly impeccable timing (the report is dated March 20th and happened to come after gold had suffered a large downside reversal in the prior days). We will be fading Goldman's bearish call and adding to long-term gold positions near major support at ~$1300:

Gold_Daily_3.24.2014