Gold News

Gold Prices Forecast to Average $826 from 2016-2019 But Rally "Will Be Dramatic" If Swiss Vote "Yes" This Sunday

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.

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum 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 he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

Follow Us

Facebook Youtube Twitter LinkedIn

 

 

Market Fundamentals