Gold is expected to trade back down below $1,100/oz in the fourth quarter of 2015, which brings an annual average of $1,159/oz during the year, according to a newly released Thomson Reuters report.
Gold is set to remain under pressure until there is more clarity on the timing and the scale of US rates normalization, said the report entitled “GFMS Gold Survey: Q3 2015 Review and Outlook”, an authoritative source of independent supply and demand data for the gold industry.
Among other bearish factors are low inflation expectations and generally weak investor sentiment towards precious metals. That said, gold may draw some support from a seasonal uptick in physical demand towards year-end, and the prospects look brighter for the next year.
In country markets, India regained its top position as the largest overall consumer of gold this year through the third quarter. Total consumption amounted to 642 tons in the first nine months, with China trailing by 63 tons.
“On the supply side, according to our initial estimates global mine production remained broadly flat in Q3 2015, up by less than 1% year-on-year, with production provisionally estimated at 851 tons. De-hedging is estimated to have prevailed with ongoing deliveries into hedges likely to have exceeded fresh hedging activity,” the report said.
“Supply from scrap continued to recover for the second quarter in a row, rising by 3% in Q3 2015, mainly thanks to stunning gains in India and Turkey, of 48% and 154% respectively. Excluding these countries, total scrap in the rest of the world declined by 5% year-on-year.”
With only a marginal growth in total supply, the 7% increase in physical demand led to a smaller surplus in the market of 51 tons for Q3 2015.
