Gold prices seen holding firm in Q3 as investors seek refuge

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Gold prices seen holding firm in Q3 as investors seek refuge

As investors seek refuge from soaring inflation and risks such as the Ukraine war, gold prices are expected to hold firm this quarter, a Reuters poll showed on Tuesday.

It is often seen as a safe place to invest in times of financial and economic uncertainty, but it tends to lose its appeal when interest rates rise.

This time, the relationship has been complicated by fears that the aggressive pace of tightening signalled by the U.S. Federal Reserve to combat inflation could derail economic growth, which could bode well for gold.

The median forecast for gold prices for the April-June quarter came in at $1,920 an ounce, according to the latest quarterly survey of 31 analysts and traders in April.

The previous quarterly poll in January compiled in January compared with $1,770 and an average price of around $1,930 an ounce.

The median forecast for the third quarter was $1,875, while the numbers for 2022 and 2023 were $1,890. 50 an ounce was compared to $1,775. Standard Chartered analyst Suki Cooper said that a geopolitical risk premium is likely to keep gold prices elevated short-term.

We expect the yield relationship to re-establish itself as the primary driver over the long term, and gold prices are likely to trend lower, even from elevated levels. After Russia invaded Ukraine in early March, gold climbed above $2,000 an ounce, but has since fallen to around $1,850 an ounce.

Capital flows into the dollar, another safe haven, also diminishes gold's appeal for those holding other currencies. FRX The strong U.S. dollar is definitely not good for gold, and multiple rate hikes in the U.S. are even worse, said Frank Schallenberger, head of commodity research at LBBW.

The median forecast for silver prices this year is $24 an ounce, easing to $22.50 for 2023, compared with $22.96 and $21.80 in the previous poll.

Manufacturers of products, including solar panels, automobiles and electronics, use silver as a safe-haven asset.

In our view, industrial silver demand is still sluggish as silver remains one of the few industrially used metals for which demand has not grown during the fast decade, said Julius Baer analyst Carsten Menke.