Citi modestly raises Q3, Q4 Gold price forecasts

UNITED STATES August 24 2016 12:23 PM

NEW YORK (Scrap Register): Citi Research modestly raised its forecast for gold prices in the third and fourth quarter, commenting that the yellow metal is likely to remain underpinned by political uncertainty and demand from exchange-traded funds even if the Federal Reserve hikes interest rates before year-end.

Citi raised its forecast for gold prices in the third and fourth quarter to $1,340 and $1,320 an ounce from its previous forecast of $1,325 and $1,280 an ounce, respectively.

“We have been bullish bullion prices in our past few notes and make only modest upgrades versus the forwards this month,” said analysts at Citi.

“Though we still expect the Fed to hike in December, per the U.S. economics team base-case view, elevated levels of political/election uncertainty in the U.S. and the stickiness of ETF and hedge fund flows into gold products leads us to boost the 2H’16 outlook,” Citi said. “We see strong support for gold prices above $1,300/oz for the balance of this year.”

So far in 2016, gold has reversed a downward spiral from the prior four years. As 2015 wound down, the Federal Reserve upped U.S. interest rates for the first time in more than a decade and expectations were for still more increases, causing gold to fall below $1,100 an ounce.