After tumbling by 28% in 2013, gold has rallied by around 10% since the beginning of the year, making it one of the best-performing assets in the world.
However, the analysts at Morgan Stanley believe that this young rally is basically over.
“Gold faces too many structural headwinds to realise significant price appreciation this year,” said Joel Crane in Morgan Stanley’s new Global Metals Playbook.
Crane joins many analysts who see higher interest rates and a stronger dollar on the horizon.
“Morgan Stanley’s global strategic six-month view favours risk assets (equities and credit) over safe havens such as government bonds, and we are also constructive on the USD. This outlook, together with market expectations of rising real US interest rates and bond yields as well as low expectations of inflationary pressure, generates considerable headwinds for the precious metals complex.”
Below are two slides from the Global Metals Playbook summing up Morgan Stanley’s thesis.