Barclays: Gold Will Receive Some Pain From Fed Interest Rate Increase, Then Gain

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Gold will extend losses this year as US interest rates increase, providing an opportunity for investors to buy the metal to benefit from a rebound spurred by Asian demand, according to Barclays Plc.

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“We expect gold prices to test new lows in 2015,” analysts Suki Cooper and Kevin Norrish wrote in a report dated yesterday, predicting that prices will drop to less than $1,130 an ounce. “The lows of this year and next are likely to offer attractive entry-level prices for the longer-term investor.”

Bullion last year posted the first back-to-back annual drop since 2000 as US equities surged to records amid an improving economy, the dollar rose and assets in bullion-backed exchange-traded products extended losses. While the physical market looks more supportive this year, that won’t be enough to overturn the economic headwinds pressuring prices, the analysts wrote.

With a 2.2% increase on Monday, January 12, US palladium bar was the biggest mover on the Global Precious Metals MMI®. At CNY 178.00 ($28.67), the price of Chinese palladium bar finished the market day up 0.6% per gram. Japanese palladium bar closed 0.5% lower at JPY 3,073 ($25.99) per gram.

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US platinum bar saw its price rise 1.2% to $1,231 per ounce. The price of Chinese platinum bar increased 0.8% to CNY 262.00 ($42.20) per gram. After a 0.3% increase, Japanese platinum bar finished the day at JPY 4,695 ($39.72) per gram.

The price of US gold bullion is back up, rising by 1.2% on Monday to close at $1,223 per ounce. Chinese gold bullion saw its price rise 1.0% to CNY 245.30 ($39.51) per gram. Indian gold bullion ended the day at INR 27,113 ($436.46) per 10 grams, after the 0.2% drop yesterday. After a couple of days of improving prices, the price of Japanese gold bullion held steady at JPY 4,648 ($39.32).

Following a 0.9% rise yesterday, the price of US silver closed at $16.52 per ounce. Chinese silver finished the day up 0.9% to CNY 3,525 ($567.77) per kilogram. Following two days of rising prices, the price of Japanese silver dropped 0.8% to JPY 626.00 ($5.30) per 10 grams. Following a two-day drop, the price of Indian silver increased by 0.6% to INR 37,726 ($607.30) per kilogram.

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