Gold to find floor in 2015, paving way for gains next year
Thursday, 29 January 2015 00:29
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Reuters: Gold faces a third year of losses in 2015 as the United States prepares for its first interest rate rise in nearly a decade, but the market should also find a floor, clearing the way for a recovery next year, a Reuters poll showed.
The survey of 38 analysts and traders conducted earlier this month forecast that spot gold, which ended 2014 little changed after snapping a 12-year bull run the previous year, will average $1,234 an ounce this year, down around 3%.
The market is then seen recovering to $1,278 an ounce in 2016, putting the trauma of 2013’s spectacular crash behind it, the poll showed.
Gold traded around $1,285 an ounce at 1410 GMT on Tuesday.
The metal is expected to come under pressure this year from a hike in U.S. interest rates, which will lift the opportunity cost of holding non-yielding bullion while boosting the dollar.
Uncertainty over euro zone stability, which has lifted gold 8% so far this year, plus worries about global growth and firm demand from Asian consumers, are likely to keep the metal supported, however, eventually leading to a recovery.
“In the short to medium term, given the differential between US and European bond yields, we can only anticipate further flows of capital into the dollar, placing upwards pressure on that currency and downwards pressure on gold,” Mitsui Precious Metals analyst David Jollie said.
“However, we suspect that expectations of rate rises are largely built into the gold price already, and any slowdown in the US or the wider global economy could allow gold the room to move higher and reassert itself.”
Gold hit a five-month high at $1,306.20 an ounce last week after the European Central Bank said it would pump hundreds of billions of euros into a sagging euro zone economy, and the Swiss National Bank scrapped the franc’s peg to the euro.
Euro zone quantitative easing is still an unknown quantity for gold, analysts said. Further instability in financial markets or signs that inflation could rise may lift the metal, but a positive response to the policy in equity markets and a weaker euro could weigh.
Silver prices are also expected to decline this year, with respondents in the poll forecasting a silver price of $17.20 an ounce this year, down from $19 in 2014.
“It is hard to like silver from a fundamental viewpoint. Global balances remain weak, with the likelihood of a silver surplus in a long line of surpluses,” Standard Chartered said in a note.
Next year silver prices are expected to recover to an average $18.20 an ounce.
