Institutions lowered their expectations for gold and silver prices, and do not believe that the 2013 plummeting market will recur

Gold is still trading below US$1,800. BMO Capital Markets believes that there is not much good news in the gold market in the fourth quarter of this year.



The agency once again lowered its expectations for gold and silver prices. In a report released last Thursday, analysts said that the Fed’s new hawkish tendencies will suppress precious metals for the rest of this year and next year .

Analysts pointed out in the report: “As inflation spreads in the value chain, many central banks have either begun to cancel loose monetary policy, or at least begin this journey, which also includes the Federal Reserve. Although negative real yields should prevent Macro assets are rapidly shifting from commodities to precious metals, but it is reasonable to be cautious about precious metals until the scale of bond purchases is reduced."

According to the bank’s latest forecast, analysts expect the average price of gold this year to be around US$1,781 per ounce, which is 1% lower than their previous forecast of US$1,803. At the same time, the bank predicts that the average price of gold in 2022 is approximately US$1,656 per ounce, which is also 1% lower than the previous forecast of US$1,669.

The bank also predicts that this year's silver price will average around US$25.10 per ounce, which is 3% lower than the previous estimate of US$25.9. By 2022, the average price of silver is expected to reach around US$24.90 per ounce, which is 2% lower than the previous forecast.

Although the Bank of Montreal has a slightly more pessimistic view of gold and silver, they pointed out that these two precious metals are "declining, but they are not out."

Analysts said that they do not expect the gold market to reproduce the plunge in 2013. After the 2008 financial crisis, the Federal Reserve began to implement monetary policy normalization, which led to a sharp drop in the price of gold.

Compared with the infamous “taper tantrum” in 2013, the price of gold has been performing well so far. In 2013, the price of gold plummeted by nearly 30% in six months. Although there was a large outflow of funds from ETFs in the first quarter, especially in North America, and the Fed is expected to reduce the scale of bond purchases by the end of the year, the Bank of Montreal capital market believes that there is no sufficient reason to withdraw from gold.

As for silver, the Canadian bank still believes that this precious metal has long-term potential. Analysts said: "We expect investors to have positive sentiments regarding the long-term industrial uses of silver, especially those related to the energy transition, to support silver prices in the short term."



Spot gold daily chart

At 8:34 on October 5th, GMT+8, spot gold was quoted at US$1766.59 per ounce.