LIMA – Nov 11 (Reuters) – Blinking from sweeping reform on price benchmarks, even the most die-hard gold enthusiasts accepted the market’s glory days had faded for now, as the bullion industry’s annual conference agreed prices would nurse losses over the next year.
Gold, which hit a four-year low of $1,131.85 an ounce last week, was expected to stabilise around $1,200 an ounce by October 2015, some of the 400 delegates at the London Bullion Market Association annual conference in Lima, Peru, forecast.
Spot gold has shed around five percent this year, in the wake of last year’s 28-percent tumble that halted a 12-year rally. It is currently trading at around $1,170.
“The question is not anymore whether gold prices can rise, but how long they will languish at current levels,” one banking delegate said.
Dollar strength, boosted by the end of the Federal Reserve’s monthly bond purchase program, confidence in the U.S. economy and expectations that interest rates will be raised, are seen dictating the metal’s trajectory in coming months.
“The most savvy investors have already moved away from gold at this point, there is not much interest,” Bank of Scotia-Mocatta managing director Sunil Kashyap said.
Lower prices in 2014 have mostly gone hand in hand with lack of volatility, with huge spread compression between bids and offers. Recent price swings have suddenly increased volatility, brightening the mood of those who placed bearish bets.
“It is not going to happen this year but gold is going to go back and bottom out at $800 or $900 an ounce,” Mike Sheehan, portfolio manager of precious metals at commodity hedge fund Red Kite said.
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