Deutsche Bank expects gold prices to average around $1,125 an ounce in the last quarter of 2015, and around $1,100 an ounce in 2016.
LONDON (BUllion Street): Deutsche Bank expects gold prices to average around $1,125 an ounce in the last quarter of 2015, and around $1,100 an ounce in 2016.
The most active December gold contract on the COMEX division of the New York Mercantile Exchange settled down by $5.90 to $1,141.40 an ounce on Friday, its worst settlement price since September 01. Gold futures finished down on Friday, closing at their lowest levels in about a month as the prospect of an interest-rate hike by the Federal Reserve weighed on the precious metal.
Aside from the hawkish Federal Open Market Committee statement released mid-week, analysts at Deutsche Bank say a resilient equity market is weighing on gold, and the downside pressure may continue into next year.
“A resilient equity market has also helped to revive the bear case for gold as the S&P nears August highs, narrowing the equity risk premium,” said the analysts at Deutsche Bank.
“The Fed statement was particularly significant in light of ECB dovishness, signaling that USD strength may not be a restraint on policy action, and thus reopening the case for gold downside,” the German Bank added.
Looking at overall commodities, the analysts note that fundamentals across a number of markets suggest that 2016 may be another weak year at least in the first half, as oversupply persists as a concern and the likelihood of further US dollar strength fosters a challenging environment for commodity returns, Deutsche Bank concluded.