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There will be no relief any time soon from gold’s worst losing streak in almost two decades, according to the most accurate forecaster for precious metals.
After sliding about 1 per cent since December, prices will drop an additional 10 per cent by the end of 2015, reaching $1,050 (U.S.) an ounce – a five-year low – predicts Barnabas Gan, an economist at Oversea-Chinese Banking Corp. in Singapore.
Mr. Gan topped 19 of his peers from banks including Standard Chartered PLC and ABN Amro Bank NV to become the most accurate analyst over the past two years, Bloomberg Rankings show.
Gold has fallen for four straight quarters, the longest stretch since 1997. It has been more than two years of disappointment for bulls who had been piling into exchange-traded products (ETPs) backed by the metal, accumulating a record hoard by the end of 2012. Since then, more than $81.8-billion has been wiped from the value of the ETPs backed by bullion.
Mr. Gan, 33, expects bullion to keep falling because of the U.S. Federal Reserve’s plan to boost American interest rates. Higher rates drive up the U.S. dollar, curbing gold’s appeal as an alternative. The metal also doesn’t pay interest, unlike competing assets, and low inflation means there’s less need for the commodity as a store of value, he said.
“The expectations for a rate hike this year are making the dollar firmer, and a firmer dollar is likely to be a significant drag on gold prices,” Mr. Gan said by telephone. He has been following the market for the past five years.
Gold for immediate delivery fell 12 per cent in the past 12 months to $1,170.55, according to Bloomberg generic pricing. Prices lost 1 per cent in the three months ended June 30, after dropping 11 per cent in the previous three quarters.
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