The outlook for gold via National Australia Bank (NAB Economics)
In brief (bolding is mine):
- Did not manage to live up fully to its reputation as a safe haven asset by failing to sustain the brief gains during the high - profile geopolitical events (the Paris terrorist attacks and the downing of the Russian fighter jet by Turkish forces at the Syrian border)
- Gold prices in the coming year are expected to be highly correlated with the pace of monetary tightening by the US Federal Reserve, which we believe is likely to be gradual next year but accelerate in 2017. As such we expect gold prices to continue to follow a moderate downward trend in 2016 to be below US$1000 an ounce by H2 2016.
More:
- Holdings backed by gold in Exchange Traded Funds (ETFs) resumed their downward trend in late October... This signifies a continuous waning in demand for gold as an investment, with rising interest rates enhancing the appeal of alternative fixed income assets
- Physical gold demand picked up strongly in the quarter, driven largely by bar and coin demand, as well as jewellery
- Going forward, the expected moderating trend in gold prices will provide some upside for physical gold demand. This is likely to be limited, however, given that gold prices have proven to be much more sensitive to speculative demand in the financial markets in the last few years
