Gold prices recently hit yet another five-year low, but HSBC is calling for a bounce back in 2016.
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The U.S. Federal Reserve is widely expected to raise rates for the first time in almost a decade when it meets next in mid-December. As a result, as the prospect of rate increases has got closer, gold prices have been falling.
Liquidity is likely to be thin on Thursday as the United States markets are shut for the Thanksgiving holiday.
On the technical front, Scotiabank said that gold found sellers again on move into the US$1,080’s an ounce, though it added it was notable that US$1,066 an ounce held yesterday and twice last week.
Spot gold fell as low as $1,054.45, its lowest since February 2010.
Now bank analysts are frequently wrong in their long term forecasting, tending to go with the flow, so perhaps not too much significance should be given to these kinds of predictions. There’s an expectation that investors may shift out of gold and into other assets that will pay higher interest.
Premiums on the Shanghai Gold Exchange, a proxy for demand in top consumer China, were trading at a healthy $5-$6 an ounce on Thursday, versus $3-$4 in the beginning of the month.
The US Federal Reserve could start raising US rates as early as next month, making US securities more appealing.
With little news to trade on, investors are already looking ahead to next week and the release of November’s labor numbers.
The fundamental picture is also bearish – Indian gold demand could fall to an eight-year low of 150-175 tonnes in the fourth quarter, the All India Gems & Jewellery Trade Federation estimated. And, as pointed out above there are plenty of potential apple cart upsetters out there which could yet have a positive impact on precious metals prices. Silver was down 1.2 percent to $14.08 an ounce, platinum was down 1.2 percent at $843.25 and palladium dropped 1.3 percent to $548.70.
“The forex market is confused this morning as the geopolitical situation has become enervated by the news that Turkey has shot down a Russian jet over Turkish territory”, Dennis Gartman, editor of the Gartman Letter, said.
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Silver futures fell 0.065 dollar or 0.46 percent to close at USD 14.04 per troy ounce at the COMEX.
