Commodities Focus – Gold Outlook 2015

In what was a volatile year for the precious metal, gold set new lows in 2014 but on the whole, held up better than many had previously anticipated.

Now with a resurgence of risk in financial markets juxtaposed against the much evolved monetary policy environment in the US, the question that many precious metals focused investors are now asking themselves is; where next for gold prices in 2015?

While we do not have any one specific price target for gold in 2015,  we do anticipate a range of outcomes for the metal. These we expect to be the result of more volatility, driven by greater political uncertainty in Europe, ongoing geopolitical tensions over the crisis in Ukraine and further developments in terms of US and UK monetary policies.

In the near to medium term we see the above factors supporting gold prices above $1200 and potentially driving them as high as $1330. Based upon this morning’s opening price of $1227 our projection implies upside potential of 7.7% in H1 2015.

Looking further out, and in the absence of a European breakup or disintegration, we see downside pressure upon gold in the second half of the year as the FOMC and the US Federal Reserve begin to tighten monetary policy at a faster pace. This would more than likely force gold back toward, and then below, last year’s lows at $1130 per ounce.

On balance we see the risks to those invested in gold as remaining tilted toward the downside however, there is scope for us to be wrong here.

Most notably, an event such as an EU member heading for the exits and breaking with the union of the European would have a significant impact upon the outlook for gold prices. Furthermore, a substantial ECB easing program which involves large scale purchases of sovereign and corporate debt could also influence the outcome for the metal. Under either scenario, we would look for gold to sustain, and potentially further, its gains from the first half.

Spot Gold / 8 Hour Intervals

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Spot Gold / Weekly Intervals

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