Mitsubishi: Sell-off in gold to continue; Silver to touch $10 per Oz

 

NEW DELHI (Scrap Monster): The latest gold and silver price forecast report released by Mitsubishi Materials Corporation- one of the world’s largest materials companies warns that the sell-off in gold is likely to continue amid expectations surrounding a possible US interest rate hike. Meantime, spot Silver prices could drop to as low as $10 per Oz, hitting multi-year lows.

 

According to Mitsubishi, investors should brace themselves for another round of decline in gold prices, before any consolidation and recovery can happen. The probabilities of relatively strong dollar and expectations regarding US Fed announcing interest rate hike later this year suggests that macro-related sell-off in gold is not yet over. However, the yellow metal is likely to gain during the second half of the year.

 

Mitsubishi forecasts that gold prices are likely to average at $1,180 per Oz during the second quarter of the year. Gold in 2015 is expected to average at $1,210 per Oz. Furthermore, it may trade as high as $1,360 per Oz and as low of $950 per Oz during the year.

 

The consensus estimates suggest that US Fed may announce rate hike in September/October this year. Any further postponement of such a decision by the Fed Reserve may open upside risk for gold. Gold may stabilize post first interest rate hike, as the Fed is expected to hold off further rate hikes in the immediate near term.

 

Currently, gold demand in Asian markets, especially China and India remain exceptionally strong. However, the seasonal physical demand in the region is likely to subside by the middle of the year. Meantime, speculative buy on dips will emerge strong as gold prices dip to lower levels.

 

Mitsubishi maintained its earlier 2015 silver price forecast of $16.50 per Oz. It expects silver prices to weaken further during the second quarter of the year. Gradual improvement in silver’s industrial demand may drive the prices higher during the second half of the year. Overall, from a short to medium term perspective, silver is likely to remain undervalued. Furthermore, the metal prices may plunge to as low as $10 per Oz, thereby hitting multi-year lows.