Gold prices are anticipated to attain a new high in the current year, especially in the 2nd half of 2016. This optimistic forecast is being seconded by leading national banks throughout the world, Swiss National Bank, European Central Bank, Macquarie, and the US Fed Reserve. Spiraling gold prices in the last two months of 2015 fuelled largely by global recessionary trends and the rout of Chinese stock exchanges in Shanghai and Shenzhen have bolstered economists and financial analysts to paint such a promising picture.
On the other end of the spectrum, numerous analysts and forecasters have predicted worldwide gold prices will continue with their bearish/downward spell-a phase that had established itself since 2010. Occasional spikes, like the one in 2011 when the price per ounce peaked at $1,900 are rather exceptions more than the norm. Interest rate hike by Fed Reserve during yearend and positive market scenario in some developed economies (with the possible exception of China) are two realistic causes forwarded by these forecasters to endorse their viewpoint.
So, apparently speaking, 2016 may not be as great a year as forecasted by some analysts but analyzing the present and forthcoming scenarios in the world’s leading financial markets, gold is all set to glitter once again!
The Trend in 2014-2015
Prices of gold forecasts for the financial year 2014-15 gravitated both towards bullish and bearish trends. Two distinct parameters or standards were taken into account for predicting the prices-the first from the trading range towards 2011 yearend till the beginning of 2013 and the other from the early phase of 2013 and thereafter. Commerzbank predicted that gold prices per ounce would be in the region of $1,125 in the second quarter of 2015. Citi Research and JP Morgan both gave estimates of $1,220 in the same year.
According to market analysts and major mainstream newspapers reported that price of gold which had experienced a 12-year bullish run attained a plateau in FY 2013-14. This happened largely due to expectations that monetary policies of foremost economies including US would become stable. As per forecasts of some analysts, gold price per ounce would average out at $ 1,775 in 2013 and would be flat at $1,780. One strategic or key factor that had a bearing on the gold prices in 2013-2014 was the plummeting demand for the metal in India-the largest consumer of gold.
According to a report prepared by Price Waterhouse Coopers titled ‘2012 Gold Price-keeping up with the price of gold’-price of the precious metal were expected to be in the region of $2,000 per ounce. Respondents that comprised leading gold mining companies offered various figures that ranged from $1350 to $2500. Out of these respondents, the maximum number envisaged a price of $2,000.
As per World Gold Council report, the average price of gold/oz was $1,688.01 for Q4 of 2011 which was 24% more than the price in the corresponding period of 2011. The yearly average price of gold per ounce for 2011 was $1,571.52. As far as 2012 was concerned, price of gold for every ounce was $1,609.49 that was 7% more than the mean price in 2011.
The annual average price of gold in 2010 was $1,224.53 significantly less than the metal’s price in 2011. The average yearly price/oz continued to scale up throughout 2012 but started sliding downwards from the first quarter of 2013 which continued through the year. Prices started appreciating in 2014 and were holding around $1,307 in January 2015 but the downward slide again reared its ugly head when it rallied around $1080 in July.
Conclusion-Forecast for 2016-2017 (Why do you think gold will appreciate in 2016?)
A full new year has just begun where the reigning price of the yellow metal is at an all-time low as everybody is looking forward to a spike in interest rate to be effected by US Fed Reserve. The Fed Reserve’s chart clearly indicates at least 4 such surges in the current year. Apart from the US, other major economies are thinking of continuing with their loose fiscal policies as well as devalue currency further in order to accelerate economic growth.
This augurs well for gold prices in the long run. Going into detail, the first part of 2016 might see a further plummeting to $900 owing to increase in fed rates. However, in the 2nd half of 2016, price of gold could surge gradually at least up to $1200 due to rise in demand coupled with ready availability of liquid money.