Brief Survey of Gold Price Projections

The spot gold price made a nice move higher early Monday as traders capitalize on improved sentiment and a major bullion bank said the gold rout may have run its course.

In early morning trade the yellow metal was trading not far off its highs at $1,232 after gaining as much $20 or 1.65% in the first couple of hours of regular trading in New York.

Gold Price in US Dollars data by YCharts

The gold price is down 26% this year and trading near 3-year lows after dramatic falls in April saw the gold price drop $200 over a matter of days. But at least one investment bank believes the worst is over for gold bugs. MarketWatch quotes a research note from Deutsche Bank (DB) out on Monday saying the "major part of the gold price correction has already occurred":

"Lessons from history suggest that although gold-price losses have been extreme, the extent of the price correction today is still some way short of the percentage declines that occurred in 1980-1. However, we would classify events over 30 years as significantly different since at that time, U.S. short-term interest rates rose to 20% with real interest rates also rising rapidly."

Other investment banks are less bullish. Goldman Sachs (GS) says bullion should reach $1,050 by the end of 2014 while Credit Suisse (CS) anticipates a move down to $1,150 by this time next year. Danske Bank (DNSKY), the most-accurate gold forecaster tracked by Bloomberg over the past two years, predicts $1,000 within three months. Money manager Jim Rogers, meanwhile, sees gold falling as low as $900.

The most volatile year for the gold price was 1980 – the London PM fix was the benchmark price at the time – when the metal's highs and lows were 40% apart following the 21 January 1980 record of $850 a ounce.

Just like the pullback in August 2011 when the price fell $105 in a single day shortly after reaching the all-time high above $1,900, in 1980 gold fell also precipitously after setting the record – within two days it fell back to under $700.

By March of that year gold was changing hands for less than $500 an ounce; the beginning of a bear market that lasted two decades.

Gold breached $850 again at the start of 2008, but in inflation adjusted terms the 1980 price is still the highest ever – gold would have to hit some $2,400 an ounce to set a record in today's money.

ABX data by YCharts

Gold mining stocks have suffered more than gold itself, with Barrick (ABX), Newmont (NEM), Anglogold (AU), Gold Fields (GFI), Kinross (KGC) and Goldcorp (GG) all tumbling badly.

Frik Els, a contributing editor at YCharts, is an editor at MINING.com. He can be reached at editor@ycharts.com. You can also request a demonstration of YCharts Platinum.