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Gold’s lackluster prices expected to continue in '15, analysts say

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With inflation rates falling, gold had a lackluster year in 2014 and is expected to maintain that at best in 2015, though some predict a decline in prices.

Gold started 2014 at $1,205.90 per ounce Jan. 1, according to Bloomberg, and closed out the year down 1.8 percent at $1,184.37 per ounce.

The high for the year was $1,382.92 per ounce reached on March 14, with a low of $1,140.54 on Nov. 5.

Dan Seiver, chief economist at Reilly Financial Advisors in La Mesa, said decreasing inflation rates, the collapse in oil prices and no significant world crises are to blame.

“Gold is supposed to be a hedge against inflation,” Seiver said. “You could argue about how well it does that, but the world is not really facing any significant inflation, and that’s a problem for gold. Europe may even be facing deflation, which is definitely not what makes you run to gold.”

Additionally, the surprise collapse in oil prices didn’t do gold any favors, either. Futures for WTI Crude started the year at $89.36 per barrel and were down to $53.27 per barrel by the end of December.

Seiver said this drop works to keep all prices down, materials such as gold included.

Lastly, the lack of empirical collapse served to keep gold prices stable but downward trending in 2014.

“People buy gold because of worldwide crises, and we don’t really see one yet,” Seiver said. “Maybe there will be one, but it’s not so obvious yet. People go to gold with nations collapsing and such -- it’s not like we live in a great world right now, but it’s not falling apart.”

As for how 2015 will progress -- gold started the year at $1181.98 and reached $1233 on Jan. 12 -- Seiver said he sees no reason why the slightly declining trend of 2014 won’t continue.

“I don’t see any reason why people are going to be superexcited about gold in 2015,” he said. “There’s nothing on the horizon. Inflation won’t go that far negative except maybe in Europe, there are no strong developments to make people pile into gold, so I think it will stay as is, no reason to rally.”

Some analysts have an even less optimistic outlook however, according to a Bloomberg report on gold in 2015.

“We expect gold prices to test new lows in 2015,” analysts Suki Cooper and Kevin Norrish wrote in a report, predicting that prices will drop to less than $1,130 an ounce. “The lows of this year and next are likely to offer attractive entry-level prices for the longer-term investor.”

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