For the second consecutive year, the price of gold has been lackluster, and heading into next year, many financial analysts forecast the yellow metal to not have much of a stellar year either.
In the past month, there have been numerous predictions as to what the price of gold will trade in 2015. Credit Suisse made headlines last month when it released a report that forecast gold prices to dramatically fall to $950 by the end of 2015, citing low inflation levels and the possibility of the Federal Reserve raising interest rates in the middle of next year.
Credit Suisse isn’t the only entity to project a depressed year for the precious metal.
Sushil Finance issued a report Monday on bullion for next year. The group noted that gold and silver prices will likely trade negatives in 2015 due to the improving labor market, stronger economic growth and decreased demand. After the release of the employment data, gold prices fell one percent, while silver prices dropped 0.9 percent.
Angel Commodities also released a report Monday on precious metals for next year and it believes gold and silver prices will remain lower throughout next year, though international demand is helping ease the falling trend of precious metal prices.
Here is what the investment group wrote in its commodities report:
“On an intraday basis, we expect gold and silver prices to trade lower on account of optimism in the US economy and waning investment demand for the metal. The NFP data released last week beat market expectations and printed at 321,000 the most in nearly three years. A run of upbeat U.S. data has supported the view that the Federal Reserve will tighten monetary policy before other central banks. On the MCX, gold and silver prices are expected to trade on a negative note taking cues from weak international markets.”
At the time of this writing, gold is trading at around the important $1,200 mark, while silver is sitting at just over $16 – silver prices have remained under $20 since the end of summer, early autumn.
ECB won’t be buying gold
As the European Central Bank (ECB) embarks upon an enormous quantitative easing initiative, ECB head Mario Draghi confirmed that it won’t be purchasing the yellow metal as part of its economic stimulus endeavor.
When Draghi was asked by reporters what types of assets the central bank would consider acquiring, he noted that they discussed every single kind of asset except for gold. This came as a surprise to analysts because Yves Mersch, a member of the ECB executive board, said in a speech that the central bank has a wide variety of assets to choose from, and cited gold as a “theoretical” asset.
The ECB’s decision not to purchase gold could make some reluctant member states, like Germany, even more nervous.
“The fact that the ECB may soon print money to buy very risky European corporate, bank and sovereign debt from vulnerable economies such as Spain, Italy and Greece and has, from some unexplained reason, ruled out buying gold will make the Germans and others opposed to ECB QE very nervous,” wrote GoldCore via Zerohedge.
Draghi is looking to stimulate the eurozone economy and he believes QE would be the only tool to spur growth because, as he says, it has worked out very well in the United States, and Japan has decided to immensely enhance its stimulus efforts.
