LBMA survey reveals a weak bull run in gold this year

Domestic commodity market analysts predicting a strong bull run in gold this year might need to do a rethink, if a London Bullion Market Association ( LBMA) forecast survey for the year is anything to go by.

Thirty one analysts from Societe Generale CIB to JP Morgan, and Barclays and HSBC to our very own BN Vaidya & Associates, who contributed to LBMA’s Forecast 2016, expect gold to average $1,103 an ounce in 2016, just 1.1% higher than the first half of January this year and $57 below the actual average price ($1,160) in 2015.


Bhargav Vaidya of BN Vaidya, told ET he expects the price on US-based Comex, which Indian prices take cues from, to decline by $50 over a month from Tuesday’s closing of $1,198. “The price by rupees also (above Rs 28,000 per 10 gm) cannot sustain amid very low demand at these rates,” he said.

The high optimism of many home-grown analysts, who forecast the price to be higher than last year’s average, stems from expectations of a reduction in both frequency and size of US Fed rate hikes because of global financial market turmoil.

The survey too says the price will be dominated by the size and frequency of the US Fed rate hikes and its impact on the dollar, but is only moderately bullish.

In last year’s survey, LBMA’s forecast contributors took a bearish view of gold, forecasting a price of $1,211 against an opening price in the first half of January, 2015 of $1,218.

“Whilst they correctly predicted the price direction they were not bearish enough with the actual price for the year outturning $58 lower than they had forecast at $1,160,” LBMA said.