The gold price on Monday gave up more of the gains it enjoyed last week after the US Federal Reserve shocked markets by indefinitely delaying cutbacks to its economic stimulus program.
In after hours trade the metal was changing hands for $1,323, down some $50 an ounce from highs last week following the announcement by the US central bank that its asset purchase program would continue at a rate of $85 billion a month.
US investment bank Morgan Stanley on Monday added to the negative sentiment, forecasting the gold price to average $1,200 to $1,350 next year before heading lower:
“While any further postponement would likely continue to benefit gold prices in the near term, we still think it is just delaying the inevitable. The longer-term narrative for gold remains in place — waning investor appetite for a risk and inflation hedge, challenged physical demand and a rising USD,” say Peter Richardson and other analysts at Morgan Stanley in a note.