London — The outlook for gold continued to sour Thursday with BNP Paribas forecasting a a 2015 average of $1,160/oz and $975/oz in 2016, the French bank said in a research note.
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"Future policy action by the US Federal Reserve remains high on gold's agenda. It will continue to dictate the pace at which the dollar appreciates (and official sector demand for gold declines) and accordingly how much downward pressure will be exerted on gold," BNP analysts Harry Tchilinguirian and Stephen Briggs said.
The London Bullion Market Association Gold Price settled at $1,161.25/oz Thursday morning.
The spot price had hit an intra-day year-to-date high of $1,307.98/oz January 22.
The only near-term positive the pair predicted is that any hike in interest rates in the US could be put on hold for the time being, or postponed until later in 2015.
"On the physical side ... further strength in the dollar stands in the way of import demand in [certain] key consuming countries, such as Turkey and India," the analysts said.
Recently, the Indian government left gold and silver import duties unchanged at 10% while the market was expecting a reduction of 2%-4%.
"India is also pursuing initiatives to monetize gold holdings into alternative investment vehicles. If successful, these would reduce future gold imports," the analysts added.
Still a refiner in India was more bullish on the outlook for imports over the next three-months due to the impending wedding season.
He predicted 80-90 mt of imports in both April and May.
In April 2014 the country, currently the world's largest gold consumer, imported 38.6 mt of gold and in May 44.5 mt, according to import data.
However, so far this year the Indian gold market has seen poor physical demand.
Platts Gold Premium 995 India was assessed Thursday at $1/oz from $2/oz Tuesday.