Bullion futures on the Comex in New York will probably average $1,208 an ounce in 2015, Jeffrey Christian, CPM managing director, said Monday in an interview, a day before the release of the research company’s “Gold Yearbook.” That would be down 4.6 percent from 2014, according to CPM.
The metal posted a consecutive annual decline last year for the first time since 1998 as the dollar rallied on concern that the Federal Reserve will raise interest rates in an improving U.S. economy. Prices fell the most in five months in February as Greece worked to resolve its debt crisis and China and Europe took steps to shore up growth.
A report Tuesday showed euro-area business activity expanded faster than economists forecast this month, signaling that a fragile recovery in the 19-nation region is becoming more sustained.
Net investment demand in gold fell 16 percent to 28.1 million ounces, as “shorter-term” buyers moved toward equities, according to the CPM. Purchases by investors will decline in 2015 to 26.9 million ounces, the group said.
Central banks bought 5.5 million ounces of gold in 2014, compared with a net reduction of 0.3 million ounces in 2013. Russian purchases more than doubled last year, according to CPM.
Gold supply rose 1.1 percent to 126.7 million ounces last year, as gains in mined metals more than made up for a decline in recycled bullion.
Fabrication demand may climb to 96.9 million ounces this year, up 4.2 percent from 2014, “predicated on an expectation of relatively soft gold prices, and on gold prices forming a base at this relatively low level.”
While bullion will continue to be pressured by a strong dollar, lower energy prices, rising equities and weaker Chinese fabrication demand, the “downside is limited as much of the impact from these issues already is baked into the price,” CPM said.
Gold rose 2.8 percent last week, the most since January, after Fed Chair Janet Yellen suggested policy makers are in no hurry to raise borrowing costs. Higher interest rates cut gold’s allure because the metal generally offers returns only through price gains.
CPM has written annual reports on gold and silver since 1971.