All of a sudden the outlook for the gold price is not so gloomy as the metal headed for a fifth straight week of gains.
It was its best performance for almost 16 months and follows a week of poor economic and corporate data of the US and China and emerging markets turmoil as Argentina devalued the peso.
The dollar was hit hard by the events, which lifted gold as the two traditionally move in opposite directions.
This week has also underlined that not all of the world’s problems have been solved. Gold fell by 28% last year partly because the improving global economy eroded its insurance or safe haven status.
Most predictions are for gold to struggle this year even so, a view echoed in the latest survey from Thomson Reuters GFMS published this week.
The consultant predicts a second year of decline for the gold price, with the price set to average $1,225/oz for 2014 compared to $1,411/oz last year.
“While there is the clear possibility of a short-covering rally in the first quarter of 2014, that could build on the recent stabilisation above $1,185 and possibly generate a test of $1,330 before the quarter is out, the gold market has not regained the sparkle of 2008 – late 2011, and is not expected to do so," the report said.
But how much faith should be placed in the regular forecasts issued by the large investment banks and consultants.
It's questionable if last year’s survey of analysts by the London Bullion Market Association (LBMA) is a guide.
All but five predicted gold would finish above US$1,700 in 2013, with the nearest to the actual price at the end of the year being consultant firm Allan Hochreiter and Sumitomo at US$1,600.
This year, predictably, the 28 predictions are much more cautious with an average of US$1,219 and a range of US$950 at the bottom and US$1,480 at the top.
Reasons for the more cautious view this year include the prospect of a stronger US dollar, continued US recovery, further ETF sales and continued strong production.
On that point, the GFMS survey noted that despite the weak gold price in the last quarter of the year total output from mines reached 2,982 tonnes in 2013, up 4.1% from 2012 as miners processed more ore to protect their revenues from lower prices.
The GFMS survey adds that a surge in demand from China was one of the few bright spots for gold in 2013. The analysts quizzed by LBMA also identied a possible relaxation of import duties in India as one of the things that might support the price in 2014.
And indeed reports this week that the Congress party in India would relax the controls on gold imports helped the price spike higher on Thursday. India was the largest consumer market for jewellery, gold bars and coins until the government curbed imports last year to help its balance of payments.
Spot gold was trading at US$1,267 Friday, up about US$12 since five days ago, though traders said the Federal Reserve meetng next week may put a brake on the recent price rise.
By Philip Whiterow