(Reuters) – Gold costs are anticipated to carry agency this quarter as buyers search refuge from hovering inflation and dangers such because the Ukraine conflict, earlier than retreating later this 12 months as rates of interest rise, a Reuters ballot confirmed on Tuesday.
Gold is historically seen as a protected place to speculate throughout occasions of economic and financial uncertainty however, because it yields no curiosity, it tends to lose its attraction when rates of interest rise.
The connection has been difficult this time by fears that the aggressive tempo of tightening signalled by the U.S. Federal Reserve to fight inflation might derail financial development, which might bode properly for gold.
Within the newest quarterly survey of 31 analysts and merchants carried out in April, the median forecast for gold costs got here in at $1,920 an oz. for the April-June quarter.
That compares with $1,770 within the earlier quarterly ballot compiled in January, and a mean value up to now this quarter of round $1,930 an oz..
The median forecast for the third quarter was $1,875, whereas the numbers for 2022 and 2023 have been $1,890.65 and $1,762.50 an oz. respectively versus $1,775.50 and $1,653 beforehand.
“A geopolitical threat premium is prone to preserve gold costs elevated short-term,” mentioned Commonplace Chartered analyst Suki Cooper.
“Longer-term we anticipate the yield relationship to re-establish itself as the first driver, and gold costs are prone to pattern decrease, albeit from elevated ranges.”
Gold climbed above $2,000 an oz. in early March after Russia invaded Ukraine, however has since retreated to round $1,850 an oz..
Capital flows into the greenback, one other protected haven, additionally diminish gold’s enchantment for these holding different currencies. [FRX/]
“The robust U.S. greenback is unquestionably not good for gold, and a number of charge hikes on the agenda within the U.S. are even worse,” mentioned Frank Schallenberger, head of commodity analysis at LBBW.
The median forecast for silver costs this 12 months is $24 an oz., easing to $22.50 for 2023, in contrast with $22.96 and $21.80 within the earlier ballot.
Silver is used as a safe-haven asset and by producers of products together with photo voltaic panels, cars and electronics.
“Industrial silver demand continues to be reasonably sluggish in our view, as silver stays one of many few industrially used metals for which demand has not grown in the course of the quick decade,” mentioned Julius Baer analyst Carsten Menke.
“We nonetheless see funding demand because the dominant driver of silver costs.”
Reporting by Seher Dareen in Bengaluru; Enhancing by Pratima Desai and Jan Harvey