March 31, 2015, 14:50 / Finance

Gold prices could rise in 2015 even with Fed rate hikes - Bank of America

Gold prices could rise in 2015 after two years of decline, even if the US Federal Reserve starts raising interest rates, analysts at Standard Chartered and Bank of America predict.

The precious metal will trade at $1,320 per troy ounce in the fourth quarter amid forecasts that the rise in borrowing costs after the first rate hike in the US will be smooth, Standard Chartered said in a review.

The average price of an ounce of gold in October-December will be $1,300 as the Fed will tighten policy at a “restrained pace,” wrote Bank of America analyst Michael Widmer.

In the meantime, as Bloomberg reports , gold is ending in the red for the second month in a row amid a reduction in investments in metal-backed exchange-traded products and a strengthening dollar ahead of the expected rate hike in the United States.

BofA and StanChart's forecasts run counter to estimates from Goldman Sachs, Deutsche Bank and UBS, which expect precious metal prices to decline. Typically, gold prices move in the opposite direction to the dollar, an additional factor strengthening which is the soft policy of a number of central banks outside the United States.

Gold for immediate delivery on Tuesday was trading at $1,181.9 an ounce, down 4.1% from early March. Gold exchange-traded fund holdings fell 3.4% in March, the most since December 2013, and the number of short positions in the precious metal in the week ending March 24 was the highest on record since 2006.