MORGAN STANLEY: The Latest Gold Rally Can't Last Because The Fed's Just Delaying The Inevitable

Gold prices surged 5.6% in the 24 hours after the Federal Reserve announced it would not taper its bond buying program, reaching as high as $1,371/oz.

At $1,327/oz today, gold prices are still remain above their pre-Sept. 18 level of less than $1,300/oz.

The fact that the Fed will continue with its easy monetary policy as is is considered bearish for the dollar and bullish for gold.

But this is not a permanent trend, argues Morgan Stanley's Adam Longson.

"While any further postponement [of the taper] would likely continue to benefit gold prices in the near term, we still think it is just delaying the inevitable," said Longson in a note to clients today. 'The longer-term narrative for gold remains in place - waning investor appetite for a risk and inflation hedge, challenged physical demand and a rising USD. We envision gold prices averaging in a US$1,200-1,350/oz range in the coming year before trending lower in the following [one]."

And he has an equally bearish view of silver, putting prices at $21.01 for 2014. They're now at $21.89:

The sharp deterioration in the outlook for the gold price that led us to turn increasingly negative toward gold has had a similar impact on silver, as the cheap proxy for the gold market. Just as the fall in gold prices made a clear and decisive break of the uptrend price channel for that metal, so, too, in silver.

End of an era.