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

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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