According to one of the banks in Dubai, due to a growing number of investors not feeling too optimistic about gold, prices are going towards substantial declines.
The overall sentiment towards this golden piece of luxury will fall significantly by next year, and the prices are most likely to fall below $1,000, according to the analysts.
ABN Amro predicts that the price of gold will trade off at around $1,000 an ounce by December 2015, even earlier than was initially projected. Prices will continue falling in 2016, with the possible rate going as low as $800 by the end of December of 2016.
These forecasts have been mentioned in the Dutch bank’s research memo, which was sent out last week. It highlighted ABN Amro’s stance on the precious metal’s long standing status being reduced.
Just this past week, gold was $1,141 an ounce, which is up 0.6% compared to the US dollar and weekly equities.
The bank’s price predictions are based on negative market feelings, financial expectations not being met, and the United States Federal Reserve considering the option of increasing their interest rates while the US dollar’s value goes up.
The note mentioned the administration alluding to the value of gold reducing in the upcoming year.
With the coming of new gold products, the gold market has been constantly changing in the last few years. The market has opened up to a wider customer group. Gold is mostly bought as an investment or protection of certain finances in addition to other purposes. This was not how it used to be in the past, and hence goes against gold’s ‘safe haven personality’.
CEO of Gold Services AG, Rold Schneebeli, mentioned that the bank’s predictions are most probably going to be revised in later days. He also mentioned that it is quite difficult to predict just how gold will perform 12 months down the line from today. Mr.Schneebeli still holds on to the belief that prices of this precious metal will be around $1,080 to $1,100 by 2015’s ending. He further termed the prediction made by ABN Amro as ‘sporty’.
2016’s fourth quarter is a year away and such predictions are usually revised as the time of prediction starts coming closer. He predicts that by the end of 2015, the $1,080 to $1,100 will remain.
Mr. Schneebeli went on to compare ABN Amro’s prediction to the 1990’s UBS analyst forecasting prices that were constantly lower than $100. Things went the other way and did not go downwards; they only went upwards. The case with gold might be similar. Only time will tell.