(Kitco News) - The dog days of summer continue to take their toll on gold, as prices remain above $3,300 an ounce but struggle to attract new momentum. Although gold is holding its ground, one market analyst warns investors that its upside potential is limited.
On Monday, Rhona O’Connell, Head of Market Analysis for EMEA & Asia at StoneX, raised her annual average gold price forecast modestly to $3,115 an ounce, up 1% from her previous estimate of $3,078.
O’Connell noted that gold prices have moved within only a 2% range over the past week and just 8% over the past three months.
Through the third quarter, O’Connell expects gold prices to average around $3,320 an ounce; however, she projects an average of $3,000 an ounce during the final three months of the year.
“I believe that, barring a Black Swan event or severe humanitarian developments, the high (an intraday print of $3,500.10 in the early London hours of April 22) is in,” she told Kitco News. “Another reason why I think the high is in is that the amplitude of spot price reactions to Fed moves has been decreasing, which also indicates the market is saturated.”
Gold has been unable to sustain gains above $3,400 an ounce, even as markets anticipate a Federal Reserve rate cut in September, with growing expectations of two additional cuts before the end of the year.
Although gold may struggle to reach new highs, O’Connell does not expect a major price collapse anytime soon. She noted that while central bank demand has slowed in recent months, purchases remain consistent.
“The tonnage is, in my opinion, less significant than the fact that they’re still buying. Net purchases send signals to investors that risks remain,” she said. “Plus, equity markets still look overheated, even though the U.S. economy has continued to surprise to the upside. Any meltdown would initially bring gold down with it—as investors cash in their insurance policy—but would then renew interest in gold as a risk-mitigation asset.”
While gold has been stuck, investors may find opportunities in other precious metals. O’Connell increased her silver price forecast, now expecting an average of $34.21 an ounce this year, up 7% from her previous outlook.
However, she also expects silver to follow a similar pattern, averaging around $37.30 an ounce this quarter and about $34 an ounce in the last three months of the year.
Currently, spot silver is struggling to break resistance at $38 an ounce, last trading at $37.97, up 0.12% on the day.
Meanwhile, platinum prices continue to struggle after testing resistance just below $1,500 an ounce nearly a month ago. Spot platinum last traded at $1,333, down 0.22% on the day.
Looking ahead, O’Connell sees platinum prices averaging $1,160 an ounce this year, an increase of 15% from her initial estimate.
