In a report issued Monday, U.K. forecasting firm Capital Economics said Gold futures will fall below $1,000 an ounce by year-end and fall as low as $800 an ounce next year.
Capital Economics’ Chief International Economist Julian Jessop attributed bullion’s recent spike to a desire for insurance against the risks of inflationary bubbles in other assets and a U.S. dollar collapse.[MW]”These risks are probably much lower than generally supposed,” he wrote, adding his forecast depends “crucially” on at least a partial recovery for the U.S. dollar. “While we do not think that gold is yet in a bubble, the weakness of underlying demand at these record price levels is at least a warning sign,” he wrote.
Gold prices extended gains on Monday as traders bought into the metal amid continued concerns about the weakening dollar. Gold hit a record of $1,167 an ounce, up by about $15 from Friday’s closing prices.