Gold likely to average around $1,300 an ounce; Silver at $18.50 an ounce

UNITED STATES August 01 2016 10:32 AM

NEW YORK (Scrap Register): TD Securities looks for gold and silver to remain well supported even when the Federal Reserve decides to hike interest rates again. 

Policymakers have not hiked since a single 25-basis-point increase in December, but a Federal Open Market Committee statement Wednesday was seen as leaving the door open for a potential hike after improving U.S. economic data for June. 

“While tightening monetary conditions along with the accompanying short-term rate increases often tend to serve as a negative for prices, the gold and silver response should be relatively benign this time around,” TDS added.

“Pending Fed rate hikes should not be seen as the start of a tightening cycle, but rather a move away from an emergency monetary stimulus environment. Consequently, the modest real increase in the opportunity cost of holding gold and silver and the negative impact on yields coming from the BOJ (Bank of Japan) and ECB (European Central Bank) should keep prices well supported,” said analysts at TDS. 

TDS said it looks for gold and silver to average around $1,300 and $18.50 an ounce, respectively, over the next year. Risk is to the upside, the bank added.