Gold futures dropped and pared gains from the rally of three weeks as Goldman Sachs Group Inc. said low inflation and higher rates of interest in the US would drag down prices later in 2015.
Goldman pegged gold at an average of $1,089 per ounce for 2016 and $1,050 for 2017, which are both lower than the forecast of $1,200.
Analysts, who include Max Layton wrote, “We continue to expect that gold prices will decline. Our confidence in lower gold prices for longer has increased on the back of lower expected inflation in the coming years.”
According to Bloomberg February delivery gold futures dropped 0.6% settling at $1,292.60 on the Comex New York. On Thursday, the price had reached $1,307.80, the highest for the most-active contract from August 15.
On Friday, the Stoxx Europe 600 Index climbed to the highest level since December 2007 and the euro pared declines against the dollar, eroding the appeal of gold as an alternative asset.
This month, gold has climbed 9.2% as slowing economies challenged policy makers to find new ways of buoying growth. Mario Draghi, ECB president pledged to purchase $68 billion of bonds every month to September 2016.
Chief executive at Marketfield Asset Management, Michael Shaoul was quoted by The Wall Street Journal as having said, “Gold held in non-US dollars has been a very good place to be over the past 12 months.”
Silver futures for March delivery dropped 0.3% to $18.30 per ounce. The price has climbed 17% this year. Gold and silver posted their third straight weekly advances, the longest rallies from mid-July.
April delivery platinum futures dropped 1.3% to $1,268.70 per ounce while March delivery palladium futures climbed 0.2% to $774.10 per ounce.
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