Gold likely to average $1,450 an ounce next year

UNITED STATES July 19 2016 11:32 AM

LONDON (Scrap Register): Commerzbank hiked its year-end gold forecast by $100 to $1,350 an ounce and expects $1,450 an ounce sometime next year as the market continues to benefit from safety flows after the U.K. Brexit vote to leave the European Union.

According to Commerzbank, the Brexit referendum has sent the gold price to a multi-year high. The next rate hike from the U.S. Fed is likely to take even longer as a result of uncertainty. Massive inflows to gold ETFs (exchange-traded funds) continue.

“However, some of the price increase was driven by speculation, which implies some scope for a correction. Even so, the gold price is unlikely to drop to pre-Brexit levels, in our view, which is why we raised our year-end price forecast to $1,350 per troy ounce,” analysts at Commerzbank added.

Investor worries about Brexit have begun to abate, but markets will probably have to deal with the issue for some time. Further, the U.K. referendum could impact elections and votes in other European nations, such as the autumn presidential election in Austria and a constitutional referendum in Italy.