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Highlights

French investment bank Societe Generale urged investors to buy gold Tuesday and maintained its fourth-quarter gold forecast at $1,350/oz, citing slower-than-expected interest rates hikes in the US and resurgent investor interest.

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SocGen analysts in a report forecast gold prices to average $1,350/oz in Q4 and $1,375/oz in Q1 2017, with gold prices expected to average $1,350/oz in 2017.

Gold was set Tuesday afternoon at $1,313.80/oz by the London Bullion Market Association. COMEX gold for December delivery closed 40 cents/oz higher at $1,318.20/oz.

"We maintain a medium-term constructive view on the commodity complex, as the rebalancing process between supply and demand is gaining momentum," SocGen analysts said in Tuesday's report.

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But in a more detailed quarterly report issued September 7, SocGen cited strong buying by institutional investors like exchange-traded funds as a major reason for the recent support in gold.

"The gold price has remained supported by investor buying interest. A key vehicle in driving the improved price performance in gold in 2016 has been the pickup in gold ETF holdings as the physical bar investment from Asia declined at higher prices," they said.

The revival of ETF interest was spurred by the move from zero- to negative-interest rate policies by some central banks, as well as the ongoing uncertainty surrounding Brexit, market volatility associated with the US presidential race, and continued concerns about the slowing emerging economies in Asia, SocGen said.

China's real GDP is expected to grow 6.4% in Q4 2016 and 6% in Q1 2017, with 2017 as a whole expected to see 6% growth, SocGen analysts said.

US GDP is expected to reach 2.4% in Q4 2016 and slip to 2.3% in Q1 2017, with 2017 GDP expected at 2.1%, they added.

"We forecast a moderately higher gold price during the remainder of the year with a Q4 2016 price forecast of $1,350 as our economists expect a slow pace of Fed tightening with the next rate hike likely at the December meeting," SocGen analysts said in their quarterly report.

--Nick Jonson, nick.jonson@spglobal.com
--Edited by Derek Sands, derek.sands@spglobal.com