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Has the gold seen its highs for the year? World Bank see prices averaging $1,600

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(Kitco News) - Gold’s spectacular run so far this year could be running out of steam as the World Bank sees gold prices only averaging the year at $1,600 an ounce.

In its April commodity report, market analysts at the World Bank said that they see gold prices rallying an average of nearly 15% this year from last year’s average price of $1,392. The comments come as the gold market try to hold strong support above $1,700 an ounce. Comex June gold futures last traded at $1,710 an ounce, up 12.5% since the start of the year.

The World Bank noted that gold prices rallied more than 6% in the first quarter of the year.

“Prices have been driven by safe-haven buying amid elevated uncertainty, buoyed by aggressive monetary easing by major central banks—policy interest rates have plummeted to historically low levels and at a record pace,” the analysts said in their report. “Strong investor demand and supply disruptions have more than offset weak jewelry demand in China and India associated with lockdowns.”

The most significant risk to the gold market remains the dominant U.S. dollar, the analysts said.

The analysts noted that safe-haven demand is expected to be an essential theme in commodity markets as supply and demand shocks ripple through the global economy. The analysts said that investors can see the trend in gold prices compared to base metals.

“The gold-to-copper price ratio—a barometer of global risk sentiment—reached a 40-year high amid heightened global uncertainty,” the analyst said.

Due to weak economic growth, the World Bank sees base metals prices falling, on average, 13% this year.

While gold continues to shine, the Word Bank is less optimistic about silver, seeing an average price rise of 3.6% this year. The international financial institution sees silver prices averaging around $16.80 an ounce. May silver futures last traded at $15.10 an ounce, down 15.6% since the start of the year.

The analysts noted that silver’s industrial use has been significantly impacted as the global economy ground to a halt because of the COVID-19 pandemic.

“The slump in demand has outweighed production disruptions from mine closures in Mexico and Peru,” the analysts said.

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