Rating agency Standard & Poor has cut its forecast for gold sharply to $1150/ troy ounce for 2015-2017, down $50/ troy ounce from its January forecast.
After posting one of its best performance through financial crisis of 2008/09 and monetary policy easing from FED Gold peaked around $1920/troy ounce in 2011 and lagging since then.
Greatest risks to gold stands,
- Higher interest rates in US treasuries, which is likely to reduce appetite for Gold.
- Gold performs well as a hedge against inflation and with current low inflation, demand for gold has taken a hit.
- In spite of FED, planning to hike rates several central banks are easing policy around the world (ECB, BOJ), is suppressing volatility and reducing demand for gold as risk hedge.
Gold is currently trading at $1129/troy ounce and according S&P, further downside pressure is likely, given the reduced demand from China and Global central banks.


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