GOLD PRICES held below $1200 per ounce in Asian and London dealing on Wednesday, trading $1.50 beneath last Friday's finish as world stock markets were also flat in quiet trade ahead of the long US Thanksgiving weekend.

 

New US data today showed personal spending rising less quickly than analysts forecast in October, while inflation in consumption prices – a key measure for Federal Reserve policymakers – ticked up to 1.6% per year.

 

"We expect investment demand for gold to wane," says a new outlook from French bank and London bullion market maker Societe Generale today, "exacerbated when the US begins to raise interest rates next year due to better economic conditions.

 

Forecasting an average 2015 gold price of $1025 per ounce, SocGen's metals analysts believe gold will fall "as the Dollar strengthens further...and the market believes there are better alternatives" to bullion.

 

Further out, SocGen now foresees gold prices averaging $862 between 2016 and 2019. 

 

More urgently, " The Swiss Gold initiative still seems to be mostly on the back-foot," says a note from refinery group MKS-Pamp, "with the majority of investors dismissing this as a foregone

'no' vote" on Sunday.

 

"If a 'yes' goes through," says MKS – meaning the Swiss National Bank must raise its gold holdings to 20% of reserves, all held domestically – "the repercussions for gold and the Franc will be dramatic."

 

The initiative would likely hamper the SNB's policy of pegging its Franc to the ailing Euro at €1.20, launched in 2011 and achieved by creating and spending money on Eurozone bonds in a huge QE program.

 

With consumer sentiment in France and Italy today coming in below analyst forecasts, the European Central Bank may have to widen the size and scope of its planned QE program – expected to detailed at next week's policy meeting – according to a speech in London by vice-president Vitor Constancio.

 

Unless buying covered bonds from Eurozone banks takes the ECB's balancesheet back to its early 2012 size of some €3 trillion, "We will have to consider buying other assets," Constancio said, "including sovereign bonds in the secondary market, the bulkier and more liquid market of securities available."

 

Berlin today sold new 10-year German government debt to investors at a fresh record-low yield of just 0.74% per year.

 

"The market is very bearish on the Euro and [Japanese] Yen," Bloomberg quotes analyst Tai Wong at Canada's BMO today, forecasting further gains in gold prices denominated in those currencies.