Gold flat; ABN Amro forecasts commodity slump to continue

Gold has been mostly flat all week after making big gains last Friday

Gold was around US$1 lower at US$1,072.

Gold was very flat on Thursday as investors wait for the Federal Reserve meeting next week.

The metal, which has been mostly flat all week after making big gains last Friday, was around US$1 lower at US$1,072.

Many expect the Fed to raise interest rates at the meeting, a measure that is likely to hit the gold price as it makes the non-yielding asset less attractive to cash left on deposit.

ABN Amro said, if the Fed does raise rates as forecast, “we expect investors to continue to liquidate positions in the months ahead because of a higher US dollar and higher US rates.”

“It is likely that new lows in prices will be reached before the end of the first quarter of 2016.”

The broker also reckons that a low oil price will dampen commodity prices, as cheaper oil will result in lower total cash costs for miners.

This should help companies remain profitable at the lower precious metal prices and, with more miners staying afloat, supply will likely be kept at a higher level than some analysts expect.

“We expect gold prices to break below US$1,000 per ounce in the coming months,” Amro said, while it sees silver dropping to US$13.50 per ounce and platinum falling below US$800 per ounce.

Silver was trading dead flat at US$14.16 while platinum lost US$9 or around 1% to US$848.


Major Movers

Randgold Resources up 31p to 4,173p

Fresnillo up 12p to 674p

Anglo American down 1p to 318p.

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