Standard Chartered Raises 2015 Average Gold Price To $1,245/Oz
Standard Chartered raised its forecast for 2015 average gold prices to $1,245 an ounce, up from $1,160, citing a more price-positive outlook for the metal next year.“The current backdrop for gold prices is one the weakest ever because of the multiplicity of factors supporting a bearish view, overlaid with the current dominance of the long U.S. dollar trade. However, we see the tide turning. We have become more positive on the prospects for gold in 2015, most particularly in the second half of the year when dollar bullishness will likely fade,” they said.
In addition to raising their 2015 price forecast, they lifted their average 2016 forecast to $1,330 from $1,220.
Currently there is a “fairly long list” keeping gold prices down, with a rate hike expected by June from the U.S. Federal Reserve, macroeconomic attention is shifting toward deflation fears, which also weighs on gold. The technical chart picture is bearish, exchange-traded funds continue to see outflows and consumer demand for physical gold is weaker, Standard Chartered said. Gold has also lost its safe-haven status as geopolitical worries lessen, and the U.S. dollar is strong.
Many of the factors pressuring gold now will be neutralized, they said, such as after the Fed starts the interest rate hiking cycle, attention will shift to when it will peak. They also expect dollar bullishness to fade and worries about deflation to subside.
Physical demand may also pick up, as the drop in prices appears to have heightened demand for gold.
“In our view, physical demand is likely to remain very strong in the $1,100-1,200 range, and will act as a support should prices move too far below $1,100. The demonstration of a floor, albeit a loose and flexible one, set by physical demand flows is also likely to be a key factor in steadying investor sentiment, and staunching further large flows out of the already highly diminished ETP (exchange-traded product) gold holdings,” Standard Chartered said.
The bank also listed their average price forecasts for silver, platinum and palladium, but did not say how those compared to previous forecasts. Their 2015 forecast for silver is $17.20 an ounce, versus a 2014 forecast of $19.20. Their 2015 platinum forecast is $1,375 an ounce, with their 2014 forecast at $1,405. Their 2015 palladium forecast is $825 an ounce, with their 2014 forecast at $780. |
