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2 Sep 2015
Gold faces downside pressure near term – BAML
FXStreet (Edinburgh) - According to analysts at BAML, the precious metal could be poised for further pullbacks in the near term.
Key Quotes
“Given the macroeconomic backdrop and acknowledging the persistent headwinds to gold prices of late, we are reducing average 2015 forecasts by 6.8% to $1,122/oz; gold should fall below $1,000/oz in 2016”.
“Continued hawkish comments from the Fed against falling inflation are our most notable concern. In fact, the combination of higher nominal opportunity costs and lack of inflation has hardly ever been bullish in the past 40 years”.
“Having said that, we believe that gold should stabilise when inflation picks up, which is one reason that we maintain an average forecast of $1,250/oz in 4Q16, when US CPI is set to expand by 2.1% YoY”.
“Gold prices are largely influenced by four macroeconomic indicators, with USD and real interest rates statistically the most significant drivers”.
“While tighter US monetary policy is bearish for gold near term, against the backdrop of subdued inflationary pressure, we believe a hawkish Fed exacerbates headwinds to the precious metals also through exchange rates”.
Key Quotes
“Given the macroeconomic backdrop and acknowledging the persistent headwinds to gold prices of late, we are reducing average 2015 forecasts by 6.8% to $1,122/oz; gold should fall below $1,000/oz in 2016”.
“Continued hawkish comments from the Fed against falling inflation are our most notable concern. In fact, the combination of higher nominal opportunity costs and lack of inflation has hardly ever been bullish in the past 40 years”.
“Having said that, we believe that gold should stabilise when inflation picks up, which is one reason that we maintain an average forecast of $1,250/oz in 4Q16, when US CPI is set to expand by 2.1% YoY”.
“Gold prices are largely influenced by four macroeconomic indicators, with USD and real interest rates statistically the most significant drivers”.
“While tighter US monetary policy is bearish for gold near term, against the backdrop of subdued inflationary pressure, we believe a hawkish Fed exacerbates headwinds to the precious metals also through exchange rates”.