(MENAFN- ProactiveInvestors) Barring any last minutes calamities gold should be more or less flat in 2014 but next year could be better says ANZ bank.
Benign Federal Reserve comments meant gold ended the week modestly lower but like equities recently day to day trading was very volatile.
The metal slumped to US$1188 on Tuesday ahead of the Fed’s interest rate meeting but recovered strongly to US$1211 the day after as Fed chair Janet Yellen maintained her dovish stance.
Any interest rate rise would be "at least a couple of meetings" away she said which economists said pointed to April next year at the earliest.
Many expect the first increase in June though the Fed has some leeway if situations such as the Russian rouble crisis deteriorate further and affect the US recovery.
When the Fed does finally decide to start raise rates will be a major influence on the gold price next year but ANZ predicts even with that headwind it should appreciate.
Analysts at the bank see a steady increase quarter-on-quarter throughout 2015 to $1280 an ounce by the end of the year and a further rise to $1420 in 2016.
One of the key drivers will be consumer demand which the bank expects to improve after India removed restrictions on imports last month.
“Physical gold demand in China and India were held back in 2014 amid high stocks and import controls respectively.
“Both these shackles have been removed putting demand on a solid footing as we head into 2015.”
This makes the potential for the price to rise much better than it was in 2014 where after a bright start consumer demand turned out to be a damp squib.
ANZ also sees the euro climbing out of its trough in the second half of the year which will curb the dollar’s rise.
Gold is often used a hedge against the US currency and the two traditionally move in opposite directions.
A rise in US interest rates would also increase the appeal of US treasuries over the metal.
It is these possibilities that make other brokers more bearish. Goldman Sachs repeated its warning that an improving US economy makes gold a poor investment currently.
Its forecast of $1050 largely on the basis that gold will suffer when interest rates do start to rise.
Key will be the behaviour of holders of gold through exchange traded funds (ETFs).
ETF investors withdrew 157 tons in 2013 and though much less than the 869 tons outflow in 2013 it was still a drag with consumers reluctant to buy.
A hour into US trading gold was down US$1 at US$1197 and around US$20 on the week.
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