Analysts Predict $1000 Gold In 2016

Gold gained almost $7 in the Asian session to trade at 1075.60 for no fundamental reasons. The US dollar eased after the release of the FOMC minutes late on Wednesday even though the minutes supported the rate increase in December. The US dollar was trading near a high of 99.85 during the day but declined to 99.25 in the morning. Prices were trading sideways as another bomb scare in Europe and gunfire in Paris fuelled tentative safe-haven bids, but a firm dollar kept a lid on prices that hit their lowest in nearly six years on Wednesday afternoon.

SPDR Gold Trust GLD, the world’s largest gold-backed exchange traded fund, said its holdings stood at 661.94 tonnes, remain unchanged from previous business day. Holdings of the largest silver backed exchange-traded-fund, New York’s iShares Silver Trust SLV, stood at 9867.78 tonnes, remain unchanged from previous business day.

Gold prices  rebounded on today from their lowest in more than five years the previous session as the dollar fell back, releasing its stranglehold on commodities and making gold more affordable for buyers paying with other currencies.  Federal Reserve officials on Wednesday continued to flag December as a likely time for interest rates to rise after seven years near zero, with two expressing confidence they will be able to pull off a rate hike smoothly despite fears of an abrupt market reaction.

“I’m convinced that the start of the rate hike cycle will see relative dollar weakness as investor money flows into other regions and other types of investment, away from the U.S. where the cost of capital – and doing business will also grow,” said Chief Investment Officer Jonathan Barratt of Ayers Alliance in Sydney. He added that a rate increase could also boost gold’s appeal as a hedge against inflation.

Precious metals are expected to slide below the $1000 level in the first half of 2016 after the Federal Reserve raises interest rates and the US dollar gains, according to BMI Research, a unit of Fitch Group. Expectations for gradual tightening will cushion the fall, with prices then returning to trade at about 1,000 and above, said John Davies, global head of commodities research.

Gold has lost about 9 per cent in 2015, dropping to a five- year low, as Fed policy makers prepare to raise borrowing costs for the first time since 2006, curbing the appeal of the metal because it doesn’t pay interest. Most investors now expect an initial hike next month, with minutes of the Fed’s October meeting, released on Wednesday, strengthening that outlook. Goldman Sachs said last month a December rate rise would probably hurt bullion. Goldman forecast gold at $1,050 in six months and $1,000 in a year as rates climb, according to an Oct 21 report. Renee Haugerud, founder of New York-based hedge fund Galtere, said in an interview on “Bloomberg” this week, bullion may fall to $900 to $1,000 due to the rising US dollar.