As the gold market awaits Wednesday’s Federal Open Market Committee meeting for clues as to when the central bank will start raising rates, Barclays analysts say they expect further headwinds for the metals. “We believe that the gold market will remain bearish for the rest of the year in response to Fed rate hikes,” they say in a research note Monday. “[T]he metal’s price continued to decline last week, falling for nine days straight, with a small rally on Friday stopping the price decline,” they say, adding that this was the longest price slump since January 1998. The analysts say gold prices have been under pressure “by the market becoming increasingly confident that the Federal Reserve will raise rates in 2015.” They note that apart from the “hiking cycle of 2004-06, gold prices tend to fall 2% in the three months leading up to the rate hike.” Barclays analysts expect gold prices to average around $1,170 an ounce in 2015.
