Citi lowers gold price forecasts for 2015, 2016
[SINGAPORE] Citi on Tuesday lowered its average gold price forecasts for this year and next, citing weak economic conditions and fundamentals.
The bank lowered its 2015 average gold price forecast to US$1,140 from US$1,180 per ounce and 2016 to US$1,050 from US$1,195.
Citi said it expects continued dollar strength as the US Federal Reserve begins tightening financial stimulus measures over the next several quarters.
Funds and institutional investors have piled into bullion over the past decade, looking for protection against inflation and betting on a weaker dollar as the US Fed pumped money into the system as part of its stimulus efforts.
As that programme comes to an end, gold's appeal has waned. "If this (dollar) appreciation manifests, then we are likely to be in for more pain in gold markets even after the first hike takes place." Citi also reduced its 2015 third and fourth quarter forecasts to US$1,090 per ounce and US$1,050 per ounce, respectively.
Spot gold was trading at around US$1,119 per ounce as of 0850 GMT on Tuesday.
REUTERS
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