POLL-Gold to stage modest recovery from 19-month lows
* Gold seen averaging $1,273/oz this year, $1,300/oz in 2019
* Silver seen at $15.80/oz this year, $16.40/oz next year
* Individual forecasts
By Peter Hobson and Sumita Layek
LONDON, Oct 29 (Reuters) - Banks and brokerages have cuttheir average gold price forecasts for this year and 2019 afterthe metal slumped to 19-month lows in August, but they stillexpect prices to stage a modest recovery, a Reuters poll showedon Monday.
Spot gold will average $1,273 an ounce in 2018 and$1,300 in 2019, according to the poll of 39 analysts and tradersconducted this month. That compares with predictions in a similar poll threemonths ago of $1,301 for this year and $1,325 for next year.
Gold has suffered a torrid few months, with prices fallingfrom a high of $1,366.07 in January to as low as $1,159.96 inAugust as a strengthening U.S. dollar made gold pricier forbuyers with other currencies and rising stock markets and U.S.interest rates offered better returns.
But it has clawed back to around $1,235 an ounce as sharpfalls on global stock markets in recent weeks revived interestin bullion as a safe place to park assets. "Gold prices are still below where their fundamentalsjustify, especially if the current shift in risk appetite issustained," said Christopher Louney at Royal Bank of Canada(RBC).
Economic and political risks are looming larger, whichshould benefit gold, said ETF Securities analyst Nitesh Shah.
"There is no shortage of geopolitical concerns ... Italy'sindebtedness and lack of a viable budget, uncertainty aroundBrexit negotiations, uncertainty around U.S. policy followingU.S. Midterm elections are some of the risks," he said.
Appetite for gold from exchange-traded funds backed by themetal is recovering after their holdings dropped almost 10percent, or 5.4 million ounces, between mid-May and earlyOctober. The beginnings of a repositioning by speculative investorswhich had ramped up bets on lower prices on the Comex exchangeto the highest on record is also a positive. However, bullishness must be offset by the strength of theU.S. economy and the dollar, which rose even as equitiesplummeted, and several more U.S. interest rate rises still tocome, said Harry Tchilinguirian at BNP Paribas, predicting goldprices would fall next year.
Higher interest rates hurt gold because they push up bondyields, denting the appeal of non-yielding bullion, and tend toboost the greenback.
Poll respondents also downgraded their silver outlook, predicting an average price of $15.80 an ounce thisyear and $16.40 in 2019, down from the previous poll's forecastsof $16.70 for 2018 and $17.52 for 2019. Silver, used in electronics as well as for investment, hasfallen faster than gold this year and is now trading around$14.60 an ounce.
The gold/silver ratio, or the number of silver ounces neededto buy an ounce of gold, rose to a 23-year high of 85 inSeptember.
But analysts expect silver to regain some ground, despitethe potential for trade disputes and slower economic growth todepress demand.
"Silver is likely to outperform gold due to the lack of newmines coming on stream, strong retail buying and the fact thatit typically outperforms when gold prices are rising," saidSamuel Burman at Capital Economics.
"We expect the ratio to drop to 76.5 by end-2019," he said.
(Reporting by Peter Hobson; Editing by Pratima Desai and MarkPotter) Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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