What will happen the Gold Prices in 2015
Deutsche Bank expects the tightening of US monetary policy to be the main driver of gold prices next year, it said.
Although the world’s leading central banks are set to act in opposing ways in 2015, the Federal Reserve, which is expected to raise interest rates after bringing its third quantitative easing programme to an end, will ultimately pressure prices lower, the bank said in a report on Tuesday.
“While some may consider the expansion in central bank balance sheets most notably in Europe and China as beneficial to the gold price, we expect US financial markets will be the ultimate driver of where gold prices are heading next year,” the bank said.
In a statement due after a two-day meeting that starts later today, the Fed is expected to shed light on future monetary policy – the phrase “considerable time” could be removed from its statement, suggesting the Fed is confident the US economic recovery is strong enough to warrant a raising of rates from their current level near zero.
“We are maintaining our bearish outlook for gold prices heading into next year. This reflects ongoing adjustments in US interest rates, equity and currency markets all of which we expect to be negative for gold,” it said.
The yellow metal will average $1,169 per ounce in 2015, it said, up 0.5 percent on its previous forecast but below its average forecast in 2014 of $1,265.
Spot gold was last at a little changed $1,197.20/1,198 per ounce, reversing strongly lower after previously recovering back towards $1,120 early this afternoon.
On the upside, with Chinese, Japanese and European economies struggling, further signs of weakness and stimulus measures may increase safe-haven buying, the bank suggested.
“More convincing could be the prospect that additional programmes of quantitative easing by other global central banks such as the ECB, BoJ and the PBoC might throw a life-line to the gold price. However, we find only a loose correlation of central bank balance sheet growth and gold price trends,” it said.
Central bank buying will remain prominent in 2015, it added. This year has seen sizable purchases from central bank such as Russia, with the country alone buying up 74 tonnes from July through to September, the World Gold Council said.
“We expect the trend of global central bank gold buying will continue albeit at a slower clip than recent years,” Deutsche Bank said.
Gold Goes Negative For The Year On Better-Than-Expected Jobs Report -FORBES-
Good news for the economy is bad news for safe-haven trades, and none more so than gold: The Bureau of Labor Statistics released a stronger-than-expected jobs report Friday morning, revealing that U.S. non-farm payrolls added 248,000 jobs last month and sending the unemployment rate below 6% for the first time since 2008. And while the equity markets cheered the news, gold futures and spot-gold prices have gone negative for the year and tumbled below $1,200 an ounce.
Gold futures (for December delivery) opened for Friday trading at $1,213.20 an ounce and had been trading in the red throughout the early morning, but the BLS’s proclamation that the economy added more jobs than expected led the precious metal to fall even deeper into negative territory. Gold futures are currently trading for $1,193.00 an ounce and spot gold is trading around $1,191.50, giving them daily losses of 1.8% and 1.86%, respectively. In crossing below the $1,200 mark, gold has gone negative for the year.
Gold opened 2014 trading at $1,207.80 an ounce, and as it approached the $1,400 mark in March it appeared to have reversed the dismal 2013 performance that saw the metal lose 28% of its value and post its first yearly loss since the year 2000. However, the release of relatively strong economic data has sent bullion lower and lower ever since, and prices nearing $1,400 an ounce now feel like a distant memory — and, according to some analysts, a price that won’t be seen for another four years.
“We are lowering our near-term gold and silver price forecasts, due to a combination of US dollar strength, relatively soft physical demand and strength in the broader equity markets. We now assume a broad $1,150 to $1,350 trading range for the next 3 years and maintain our $1,400 long-term gold price forecast,” wrote RBC analyst Stephen Walker in a research note Friday morning. Walker has a $1,285 price target for gold in 2014, $1,300 for 2015 and 2016, $1,350 in 2017 and says it won’t hit $1,400 until 2018.
Market observers widely expect the Federal Reserve to raise interest rates in the first half of 2015 — a move that would strengthen the dollar and potentially cause additional weakness in gold — but Walker also said Friday that he thinks gold’s current levels could be pricing in an end to the the Fed’s quantitative easing program as well as a mid-2015 rate hike.
“We do not expect a further significant breakdown in the gold price,” Walker wrote. “While Asian, and specifically Chinese demand is likely to be well down on the record levels of physical demand seen in 2013, we believe price sensitive buyers should appear to remain supportive at the $1,200 per ounce level and investment and jewelry demand should still be higher than in 2012, albeit lower than 2013.”
For traders looking at gold miners, however, it’s the current spot-gold price that matters, and since that price has dropped to $1,191.50, shares of some of the world’s largest gold producers have dropped into negative territory as well. Newmont Mining NEM +4.81% is down 1.83% in early Friday trading while Goldcorp is down 3.73% and Barrick Gold is down a whopping 4.08%. Shares of the bullion-backed ETF SPDR Gold Shares, meanwhile, is down 1.76%.
While gold and gold producers languish in negative territory Friday, the equity markets are celebrating the jobs report: the Dow opened up triple digits and is currently enjoying a 117-point (0.7%) gain, while the S&P 500 is up 0.8% and the Nasdaq is up 0.94%. The U.S. dollar spot index is up 1.2%, and these gains have translated into losses for the Euro: as of mid-morning trading on Friday, the Euro/USD index has fallen 1.29% to $1.25.