According to Singapore-based Oversea-Chinese Banking Corp, the Federal Reserve will raise its benchmark interest rate twice next year. This would boost the dollar and would affect gold prices.
It is noteworthy that the lender was the most accurate bullion forecaster in the third quarter. According to analysts, the precious metal’s price will come in at $1,175 an ounce in the first quarter of 2017, putting bullion at $1,150 an ounce in the second quarter and at $1,125 an ounce in the third quarter of 2017. In the final three months of the next year, gold is seen to trade at $1,000 an ounce.
At the end of the last week, the spot price of gold was at $1,170 an ounce.
According to Barnabas Gan, an economist at Oversea-Chinese Banking Corp, the Fed is most likely to raise rates by 25 basis points at the December meeting, so the firmer greenback is a strong factor to limit any rally in the gold price.
Forecasts of analysts at ABN Amro often coincide with those of Singapore’s economists. However, ABN Amro notes that rising real yields on US government bonds represent a serious negative factor for gold.
In the meantime, Commerzbank AG expects a slight growth in prices, citing risks associated with Donald Trump’s presidency and negotiations on terms of Britain’s withdrawal from the EU.
