The gold price will test new lows in 2015, according to Barclays, which forecasts the metal to average $1,170 per ounce in 2015.
“We expect gold prices to test new lows in 2015 as they battle formidable hurdles in the form of the dollar strengthening against the euro to levels last reached over 10 years ago and the first rate hike in the US in nine years,” it said.
Spot gold was last at $1,238.90/1,239.70 per ounce, up $8.70 – this morning prices reached a three-month high at $1,244.50.
Gold will breach $1,130 for the first time since April 2010 when the US raises interest rates, Barclays forecast, predicting the Fed will make the first increase in June this year. The dollar will hit 1.10 against the euro, which would be the lowest since September 2003, it also said.
“Gold prices tend to struggle during periods of rising interest rates and positive US real interest rates, due to competing with yield-bearing assets and the fact that gold does not pay dividends or interest,” it said.
In the past six rate hiking cycles, gold has in fact risen six percent on average, the bank said, because its fundamentals can offset the downside pressure.
“[But] gold-specific factors, such as the physical market looking more supportive, will not be enough to overturn the macro headwinds pressuring gold this time,” Barclays said.
The market will remain in surplus by more than 1,000 tonnes despite a projected contraction in recycled gold and the official sector remaining a net purchaser, the bank said
“Catalysts are more likely to stem from external factors, in particular, if rate hike expectations are delayed or the dollar weakens,” Barclays added.
Favourable news could stem from the physical market should demand in China pick up or India reduce its gold import duty. Many market participants have said the duty would need to be lowered to stimulate demand, the bank added.
In other metals, silver will average $15.20 per ounce in 2015, Barclays predicted, because “the silver balance continues to point to further weakness, and we believe silver remains susceptible to the downside”.
The market is set to remain in a surplus of 5,156 tonnes once again
“There have been mine closures as a result of lower prices but output has not been hugely affected,” the bank said.
Silver at $17.16/17.21 per ounce was around a one-month high and up 19 cents.
The bank expects platinum to average $1,324 per ounce this year, with the market remaining in deficit following strikes in South Africa in 2014 which hit supply.
“We expect the platinum market to deliver another deficit in 2015 and elevated positioning has been flushed out. We would advocate buying platinum on price dips, but would caution that gold is likely to weigh upon prices,” Barclays said.
In palladium, Barclays says that the metal will average $850 per ounce also after remaining in a heavy deficit.
“Downside risks to palladium stem from a contraction in auto demand in China; disinvestment; and, of course, surprise stock releases. Perhaps most importantly, the market is set to deliver a sizeable deficit yet again,” it added.
Platinum rose $10 to $1,244/1,249 per ounce after hitting a one-month high at $1,248, while palladium was close to three-week highs, up $8 at $816/821.
(Editing by Mark Shaw)
The post Gold to average price of $1,170/oz in 2015, silver $15.20 – Barclays appeared first on The Bullion Desk.
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