Gold will come under further pressure over the course of the year as the Federal Reserve moves closer to lifting rates, but prospects for the precious metal looks far more promising in the next few years, according to Bank of America Merrill Lynch.
“Right now, investors are not in the mood for holding gold because they see the Fed raising rates. So, I think in the next three months you’ll see downside risk, $1,100 an ounce is likely,” Francisco Blanch, commodities analyst at Bank of America Merrill Lynch told CNBC. “But if you look out 2-3 years, things are a lot brighter for gold,” he said.
Gold kicked off the year with a bang, rising around 8 percent in January. However, the yellow meal has since erased most of its gains as a stronger dollar – driven by rate hike expectations –and gains in equities dim its appeal. Spot gold last traded around the $1,210 level.