(Reuters) – Gold price started stabilizing after U.S. economic data implied continuing the stimulus program a little longer.
The U.S. first quarter economic growth revision calmed commodity investors’ fears from ending the bond purchasing program too soon. Investors interpret positive news of the U.S. economy as a confirmation of tapering the bond purchasing pace. Likewise, the disappointing news is understood as a sign of delaying the end of the QE program. This reaction causes the abnormal volatility that should continue for the next couple of months, according to Tobias Blattner, an economist at Aiwa Securities.
Gold price in the spot market rose by 1% to reach $1,235 per ounce on Thursday. The yellow metal price fell 4% on Wednesday to reach the lowest since August 2010 to reach $1,221.80, Reuters said.
Analysts at the Dutch ABN Amro Banking Group lowered their 2014 gold price forecast to $1,100. They said gold price fell by 25% this year, which indicate investors are losing trust in precious metals.
Several other financial institutions lowered gold price forecast for the end of the year. BNP Paribas lowered gold price forecast for 2014 average by 24% to be $1,155. Goldman Sachs reduced 2014 gold price average forecast to $1,050 per ounce.