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Gold dipped from $1,200 an ounce on Wednesday as equities rose on optimism over the US economy, while traders nervously awaited cues from the dollar and a Swiss referendum on central bank gold reserves.
The gold market has been in a tight range this week, lacking direction ahead of the US Thanksgiving holiday on Thursday and the Swiss referendum on Sunday. The metal has seen quiet trading since recovering from a four-and-a-half year low earlier this month, though not everyone believes the worst is over.
Societe Generale cut its forecast for gold and said that the prices would average $1,150 an ounce in the fourth quarter and $1,025 next year.
“We expect the gold price to continue to fall as the dollar strengthens further and the gold bear market continues, leading to the metal averaging just $862 between 2016 and 2019,’’ Societe Generale analyst Robin Bhar said in a note.
“We continue to expect investment demand for gold to wane, as the markets believe there are better alternatives, and this will be exacerbated when the US begins to raise interest rates next year, due to better economic conditions and low inflation.’’
Spot gold had eased 0.1 per cent to $1,199.15 an ounce by 0341 GMT, after gaining 0.3 per cent in the previous session.
Asian stocks
Asian stocks edged up after upbeat US economic growth data calmed investor anxiety over a deteriorating global outlook.
The US Government had upgraded its reading on third quarter gross domestic product to 3.9 per cent on Tuesday from 3.5 per cent reported last month, though the upbeat picture was somewhat marred by other data showing lower consumer confidence and moderation in house price gains.
Recent strong economic data from the United States has bullion investors worried that the Federal Reserve could soon raise rates, hurting gold, a non-interest-bearing asset. A robust economy also dampens gold’s safe-haven appeal.
Swiss referendum
Traders were eyeing more US data due later on Wednesday for cues, while also awaiting a referendum in Switzerland that could result in the central bank purchasing bullion.
The vote is aimed at preventing the Swiss National Bank from offloading its gold holdings and obliging it to hold at least 20 per cent of its assets in gold, compared with 8 per cent last month. The most-recent opinion poll showed that support among Swiss voters for the initiative has slipped to 38 per cent.
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