Author: Paul Ploumis11 Nov 2014 Last updated at 06:44:56 GMT
NEW DELHI (Scrap Monster): The gold price that rebounded strongly on Friday, failed to sustain its rally as bearish sentiments started showing signs of dominance. Meantime, investment banks continued to lower gold price forecasts and advise investors to be cautious on gold.
UBS has lowered its short-term gold price forecasts. However, the bank feels that the recent decline in gold prices is ‘overdone’. Gold’s one-month price forecast has been lowered from earlier $ 1,250 per ounce to $ 1,180 per ounce. The average gold price forecast for the entire year 2014 too has been lowered from $ 1,270 per ounce to $ 1,230 per ounce. Meantime, the three-month price targets have been kept unchanged at $ 1,200 per ounce. Also, the 2015 average forecast has been left unchanged at $ 1,200 per ounce.
According to UBS, gold will continue to remain under pressure through the year ahead. A breach of $ 1,100 cannot be ruled out, though UBS believes that the yellow metal may not trade below these levels for a sustainable period. The bank attributes gold’s price decline to a number of external factors including the sharp appreciation witnessed in US dollar.
On the other hand, Goldman Sachs has reiterated its cautious view on gold. The bank sees more turbulence in gold in the next six months. However, the prices may start stabilizing after that. It expressed mixed view on gold outlook for next year. The prices are likely to pull back in the next six months, it added. According to Goldman Sachs, rising interest rates, inherent strength in dollar and improving US economic situation are the key factors which may continue to further drag the gold prices.