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Gold Inches Higher; Firm Sees Price Bottoming at $1,080 in '15 -- Barron's Blog

Mar 31, 2015 13:32:00 (ET)



By Johanna Bennett

Gold futures on Tuesday edged a bit higher, but remained on track to post a loss for the second consecutive month.

But a report out today by Metals Focus forecasts that gold prices will actually stabilize in 2015 after a two-year slide. The firm sees gold prices bottoming out at $1,080 an ounce, their weakest since February 2010, and to average $1,190 an ounce in the full year.

In a press statement issued today, the firms wrote:


There are good arguments to suggest that 2015 may well see the end of the gold bear market. While Western investor interest in gold remains low, selling pressure is likely to ease further from the already much-reduced level of liquidations seen in 2014. Meanwhile, Asian investment demand for physical gold is expected to recover from last year's slump. Taken together, this points to stable or even improved investment demand for gold this year compared to 2014.



Other supply/demand factors should also at least mitigate the pressure on the gold price. Albeit marginal, the decline we forecast in mine production this year does suggest that the tremendous growth in output seen over the past two decades has probably come to an end. Meanwhile, producer hedging should remain slight and recycling is expected to remain flat, at levels far lower than those seen a few years ago. Moving to demand, jewelry consumption is forecast to increase, fueled by growth in Asian markets. Official sector activity will also lend support to gold, as net purchases are expected to remain at near record levels...Finally, we believe that the actual start of US interest rate increases will, paradoxically, temper the pressure that their expectations have been placing on gold.


Earlier today, gold for delivery in April gained $1.50 an ounce or 0.213% to $1,186.30 in recent trading, while June prices, today's most active future contract, gained 0.07% to trade at $1,186.10 an ounce.

A day earlier, gold fell for the second straight session, pressured by strength in the U.S. dollar and a huge rally by U.S. stocks.

In the ETF realm, the SPDR Gold Trust ( GLD) fell 0.1% to $113.62 and the iShares Gold Trust ( IAU) fell 0.09% to $11.45. The Market Vectors Gold Miners ETF ( GDX) fell 1.19% to $18.25.

Among the leveraged ETFs, the Direxion Daily Gold Miners Bull 3X Shares ( NUGT) fell 3.37% to $9.46.


More at Barron's Focus on Funds blog, http://blogs.barrons.com/focusonfunds/

(END) Dow Jones Newswires

March 31, 2015 13:32 ET (17:32 GMT)


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