One analyst predicted gold price down to the dollar

2015's most accurate gold price forecaster turns huge bull

Bernard Dahdah of Natixis speaks to 4-traders in 2013. Image: YouTube

The London Bullion Market Association on Monday announced the winners of its gold price forecast competition for 2015.

The survey of 35 analysts had predicted a narrow trading range for gold in 2015, forecasting an average of $1,211 a troy ounce with a range between $1,085 to $1,356 over the course of the year.

That proved too optimistic with gold averaging $1,160 in 2015.

The winner of the 2015 competition, Bernard Dahdah of French investment bank Natixis, got it exactly right with a forecast of an average $1,160 for the year. Dahdah's range was fairly wide, predicting a low of $950 and a high of $1,400.

This is how Dahdah justified his prediction back in January 2015:

Our view is that the biggest driver behind the price of gold this year will be the strength of the US dollar. Benefiting from higher employment and lower oil prices, growth in the US is expected to accelerate and strengthen the dollar further.

Loose monetary conditions in both Europe and Japan will help weaken these currencies versus the dollar, especially as the Fed approaches its first prospective rate hike, which we expect will take place in June. Higher interest rates in the US would increase the opportunity cost of holding gold.

Producer hedging is expected to accelerate, which should create a source of supply in the market. Holdings of gold in physically backed ETPs are expected to continue to be a source of supply of the metal. Central banks are expected to have a neutral effect on gold.

We do not expect any imminent lifting of Indian import tariffs and we do not see Chinese demand for gold returning to levels last seen two years ago.