2015 Gold Forecasts Cut Even as Money Managers Fear 'Over-Valued' Bonds & Stocks

EDGWARE (Scrap Monster): Gold prices approached 1-week highs above $1209 per ounce lunchtime Thursday in London, before edging back as the US currency rallied on the FX market and European equities cut earlier losses from new multi-year highs.

A net 25% of professional investors polled by Bank of America-Merrill Lynch think global stock markets are now over-valued, a report said this week, up from 23% in March and just 8% in February.

Bond prices worry professional money managers even more, the BAML study says, with a net 84% now thinking that fixed-income markets are over-valued.

But in the gold bullion market, a poll of 38 analysts and traders by Thomson Reuters finds the average 2015 gold price forecast being cut – down from $1234 per ounce in January to $1209. 

"Gold prices are bouncing around the $1200 per ounce level," says a note from Dutch bank ABN Amro, "putting both bulls and bears on their wrong foot all the time."

Closing at a discount to China's main domestic wholesale gold contract, Shanghai's free-trade zone gold ended Thursday just 16 cents above comparable London quotes per ounce.

The iSGE's key offshore contract also saw lower turnover than the main domestic Au(T+D) contract for the fourth session running since suddenly overtaking it last week.

"Gold continued to push higher during early Asian trade today," says a trading note from Swiss refining and finance group MKS, "before succumbing to selling pressure as the Shanghai on-shore premium moved [up] towards $2.50."

Shanghai's stock market jumped 2.7% to new 7-year highs Thursday despite a warning from Chinese premier Li Keqiang that the current 7% rate of GDP growth – the slowest since the global financial crisis – "won't be easy to achieve" again this year.

Northern Eurozone bond yields meantime fell to fresh record lows as prices rose further following yesterday's commitment to €1.2 trillion of QE purchases by the European Central Bank.

"We still think German 10-year yields will be around zero" at year end, says ICBC Standard Bank strategist Steven Barrow – "considerably below the consensus."

Over in world No.2 gold consumer nation India – where the spring festival of Akshaya Tritiya has been promoted as an 'auspicious' time to buy gold for over a decade – the market "is now saturated with importing banks and supply" says the Platts news service, quoting a bank trader.

"The wedding season is nearly over, and then we are heading into the slow months of June/July," another broker says.

Courtesy: www.bullionvault.com