Gold News

2016 Gold Price to Fall 14% Says 2015's Top Forecaster

GOLD PRICES again fell below $1090 per ounce in London trade Thursday, heading for a 1.7% loss from last Friday's 10-week closing high as European stock markets fell hard and crude oil whipped around $30 per barrel – its lowest price since April 2004.
 
2016 gold prices will average $970 per ounce, says Bernard Dahdah at French investment and bullion bank Natixis – winner of the 2015 gold forecast competition held by trade association the LBMA – ranging between $900 and $1300.
 
That would mark a 14% drop from last year's average, and the fourth drop in a row since gold's annual average peaked in 2012 at $1669 after 11 consecutive gains.
 
Dahdah forecast the 2015 gold price average down to the dollar at $1160.
 
Gold price, USD per ounce, annual average 1991-2015
 
"Gold could break as low as $950/oz," says 2014 gold forecast winner Frederic Panizzutti at Swiss refining and finance group MKS, but "the ongoing geopolitical turmoil should provide a floor on the price of gold" with the 2016 price topping at $1210 and averaging $1120.
 
A series of murderous terrorist attacks in Jakarta, the capital of Indonesia -- the world's largest Muslim nation -- saw Asian stock markets today lose 1.4% on the MSCI ex-Japan index, even as Shanghai rallied almost 2% from near 13-month lows following Wednesday's 3% plunge in New York's tech-heavy Nasdaq.
 
Yuan gold prices ended Thursday flat on solid trading at the Shanghai Gold Exchange, with Asian trade seeing "downward pressure from real money [investment accounts] and [mining] producer names," according to one local wholesale dealer.
 
Shares in French auto-giant Renault then lost almost €6 billion ($6.5bn) as the stock sank 20% following news of police raids over emission-test cheating, apparently similar to the VW diesel scandal which has now halved the value of the world's largest car marker since early summer 2015.
 
"It will be interesting to see if gold can manage to recover above $1100 after [commodity tracer-index] rebalancing-related selling abates later this week," said Swiss bank UBS in a note Wednesday.
 
Meantime, "Short-term thinking appears to dominate for now [with] few [investment traders] willing to put on more strategic positions."
 
"Rising interest rates imply a higher opportunity cost of holding gold," says Natixis' Dahdah in his new 2016 forecast.
 
"A strengthening Dollar and higher yields reduce the interest in gold. Furthermore, the stronger Dollar will continue to compete with gold as a safe haven."
 
London market-maker and bullion bank Barclays meantime trimmed its 2016 average gold price forecast from the $1150 level first predicted 12 months ago to $1100 per ounce, saying that compared to base metals and other commodities it "expect[s] gold to find some support."

Adrian Ash is director of research at BullionVault, the physical gold and silver market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and is now a regular contributor to many leading analysis sites including Forbes and a regular guest on BBC national and international radio and television news. Adrian's views on the gold market have been sought by the Financial Times and Economist magazine in London; CNBC, Bloomberg and TheStreet.com in New York; Germany's Der Stern; Italy's Il Sole 24 Ore, and many other respected finance publications.

See the full archive of Adrian Ash articles on GoldNews.

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