Gold Price Will Fall Before Rising Again

Gold prices spiked this week after North Korea fired a missile over Japan, but Morningstar analysts believe the yellow metal will fall in the short term

Morningstar Equity Analysts 31 August, 2017 | 12:06AM

Analysts expect gold prices to fall in the near term before recovering to $1,300

The popularity of gold jewellery in China and India has plummeted in recent years, dragging global demand to its lowest level in seven years. But despite this massive decline in the largest single source of gold demand, prices have proved resilient, largely due to strong investor demand. In the face of ongoing interest-rate hikes by the US Federal Reserve, ETF holdings have risen to levels last seen in 2013, a period defined by much higher gold prices.

Prevailing prices of nearly $1,300 an ounce have limited fundamental support. Continued rate hikes threaten to reverse last year's near-record ETF inflows, as still-manageable inflation would push real interest rates well above levels that attract investor interest.

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Morningstar Equity Analysts  Morningstar stock and fund analysts cover 2,000 mutual funds, 2,100 equities, and 300 exchange-traded funds.

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