Gold to average $1,321 this year: Sharps Pixley

Gold forecaster Sharps Pixley is sounding very bullish on the price of gold in 2015, saying it it "going out on a limb" to predict the yellow metal will average $1,321 an ounce, hitting a high of $1,450 and a low of $1,170.

Forecasting for the annual London Bullion Market Association's Precious Metals Forecast Survey, Sharps Pixley, a leading gold prognisticator, says that while US interest rate rises are already factored into the price, it sees ongoing economic growth declines "prompting central banks to fight deflation by resorting to inflationary pressures in H2."

It also sees good physical demand for gold based on the high US dollar causing investors to "seek to insure or hedge against currency debasement" in emerging currencies.

"In short, we see gold demonstrating that it has turned a corner and investor flows return with a vengeance, aided by short covering and fresh longs in the futures markets," states the forecast, which adds that gold will see resistance at $1,450:

"Perhaps most disappointingly though we are unlikely to see runaway prices beyond the $1450 level without either significant new product innovations or without the sort of black swan events in the economy that few of us would wish for."

Sharps Pixley's prediction has gold going considerably higher than other recent forecasts.

Closely followed gold market commentator Martin Murenbeeld – chief economist at Dundee Capital Markets – said on Dec. 22 that gold will average just over $1,200 in the first quarter 2015, then rise to $1,277 at the end of the year and back above $1,300 by Q2 2016.

Standard Bank said in a report recently that gold could average $1,223 per ounce in 2015, but it sees gold gaining in 2016 and 2017 due to "improved supply/demand dynamics." The latter refers to worldwide gold production declining 2 percent over the next 5 years, with the gold market posting a surplus of 322 tonnes in 2015 and 138 tonnes in 2016, before moving into a deficit of 48 tonnes in 2017.

Gold had a ripper of a week last week, following a surprise decision by the Swiss National Bank to end its currency cap- a cornerstone of the country's monetary policy. On Friday the precious metal jumped to a high of $1,282 an ounce – the highest since end-August and a more than 5% gain for the week. Gold is now trading some $140 above its near four-year low hit early November.