Gold prices may fall below $1.2 thousand per ounce due to a stronger dollar and a decline in Asian demand

Almaty. April 8. Silkroadnews - Gold prices may fall below $1.2 thousand per ounce due to a stronger US dollar and falling demand in Asia, RBC says.

“In the coming months, gold, which price increased by more than 15% (up to $1240 per ounce) since the beginning of the year, will start falling in price due to decline in demand in the Asian markets and possible strengthening of the US dollar, says the report released on Thursday by Thomson Reuters.  According to the analysts, the gold price could fall below $1,200 per ounce,” the statement said on Friday.

According to the Thomson Reuters survey, the rise in prices for the precious metal observed from the beginning of 2016 is likely to be a short-term, as the recovery in the financial markets gradually fades. The change in the investors’ moods are associated with the expectations of monetary policy tightening by the US Federal Reserve that, according to Thomson Reuters forecasts, will continue raising the interest rates this year.

“This means that in the long term the US dollar will rise relative to other currencies, and the US dollar-denominated gold prices are expected to fall,” the analysts say.
“The dollar strengthening could create a new pressure on the value of gold and its reputation as a safe-haven asset,” Thomson Reuters writes.

Another important factor, which, according to analysts, influence the precious metal dynamics, is a slowdown in demand in the key Asian markets. The analytical review shows this trend appeared in 2015. In particular, China’s total demand for gold, excluding the Central Bank purchases, decreased by 7% to 867 tons per year. The global demand for gold declined by 2% to 4.1 thousand tons, while the volume of gold production grew by 1% for the year to 3158 tons in 2015. The world jewelry production fell by 3% to 2.2 thousand tons.

According to the World Gold Council report, in first quarter of 2016 the prices of gold grew at a record pace since 1986, having increased by more than 16%. According to the Commodity Futures Trading Commission (CFTC) of the US, in March the investments in the world’s largest gold exchange-traded fund SPDR Gold Shares reached the highest level since December 2013. The head of the American Double Line Capital Jeffrey Gundlach forecasts that by the end of the year the gold price will rise to $1.4 thousand per ounce.