A new report by London-based research group Metals Focus
– Gold Focus 2015 – estimates that the gold price will bottom this yearto start a rising trend in 2016 after three years of declines.
The research body expects further price weakness in the next months and a low for
the year at $1,080 which would constitute a more than 5-year low.
The firm’s expected annual average of $1,190 would mark a 6% decline compared to last year.
“The biggest headwind continues to be expectations of US interest rate increases later this year, as other developed economies’ ultra-loose monetary policies (notably the Eurozone’s) remain in place, this helping to drive?up the dollar against other currencies. Low inflation, weak commodity prices and strong equities are other factors that should keep gold under pressure,” says Metals Focus in its 88-page review.
Paradoxically, the organization also believes that the actual start of US interest rate increases will temper the pressure that expectations of a rise had placed on the price and mark the turning pointing.
Shortly after the first Fed action in six years gold will start appreciating according to the report which is “premised on our expectation that these increases will be slow and modest, leaving real rates in negative territory for some time to come.”
According to the report, from 2016 onwards, there are several well grounded arguments to be made to provide the spark for a renewed gold bull market.
While interest in gold from the West remains low, selling pressure is likely to ease further from the already much-reduced level of liquidations seen in 2014.
In the meantime, Asian investment demand for
physical gold is expected to regain ground from last year’s plunge.
Potentially gold-friendly developments in debt, inflation,
foreign exchange, commodity and equity markets and the scope for a far
more harmful environment for international relations should also push
the price higher.