Gold Focus 2016 report predicts robust investor gold demand

By Carolina Curiel (ScrapMonster Author)

April 01, 2016 01:11:47 AM

EDGWARE (Scrap Monster): The Gold Focus 2016 report released Thursday by Metals Focus predicts that investor gold demand is likely to remain robust during the current year. The consultancy also expects gold prices to touch new highs during the fourth quarter of the year.

According to Metals Focus, gold in 2016 has made the most bullish start to a year since 2008. The yellow metal has risen by over $200 per Oz during the initial two month period of the year. The sharp rise signals the end of multi-year bear market, the consultancy noted.

The report states that gold is likely to witness further correction from its peak of $1,285 per Oz during the second quarter of the year. However, the correction is unlikely to sustain. The gold prices will start rebounding in the third quarter and touch fresh highs of the year during Q4.

Stronger market activity in key markets such as India and China is likely to lend support to gold prices. MF believes that stronger market activity in Asian countries, especially India, should set a higher floor price for gold in 2016, as compared with the previous year. The rising Asian jewellery and bar demand is likely to result in higher floor prices.

The Metals Focus report notes that the global economic outlook is likely to deteriorate further on further slowdown in Chinese growth coupled with conflicting data coming out of the US. The weakness in global economy is likely to boost gold’s demand as a safe haven asset. The Western investor interest in gold is likely to rebound as the year progresses.

MF remains bullish on physical demand for gold in world’s two largest gold consuming nations-China and India. The gold demand in both these countries is likely to post double-digit growth during 2016. The Chinese local investors are likely to park their money in hard assets like gold on fears of further depreciation the country’s currency. Hopes of further price hikes are likely to cause increased buying activity in India. However, the physical demand looks weak as of now. MF also foresees the gold market to be in balance in 2016.