(Kitco News) - Commerzbank is calling the late September-early October sell-off in gold prices a “short-lived autumn depression,” forecasting that prices will rise in 2017.

The bank lists a fourth-quarter price forecast of $1,250 an ounce but sees this improving to $1,300 and $1,350 in the first two quarters of 2017. Commerzbank sees $1,450 gold by the end of next year.

The weakness in gold and other precious metals this month was mainly the result of selling by speculators, the bank said.

“If a Federal Reserve rate hike in December appears more probable after the U.S. elections, prices are likely to further decrease slightly,” Commerzbank said in a research report Friday. “We do not expect any more pronounced price slide because the selling pressure from speculators is likely to abate and physical buying interest will doubtless pick up at lower prices. We still envisage rising precious metal prices in 2017.”

Much of the early-October swoon was technical in nature, with selling triggered when prices fell below chart support and the psychologically important $1,300-an-ounce level, Commerzbank said. Commodity Futures Trading Commission data confirmed an exodus of futures traders with long, or bullish, positions. Exchange-traded-fund inflows continued, however, although this demand has been dwindling lately, Commerzbank added. Meanwhile, physical demand in key Asian nations has been muted so far this year.

Interest-rate futures have factored in only a 70% probability of a Federal Reserve rate hike in December, which is expected by Commerzbank. Tighter monetary policy is normally viewed as bearish for gold, and analysts say a Hillary Clinton win in the U.S. presidential election could mean some more selling pressure. However, Commerzbank continued, any gold-price weakness should be only temporary as long as the market does not begin to price in a series of U.S. rate hikes.

“The reduction in speculative net long positions is likely to come to a gradual halt, meaning that the selling pressure from this side should abate,” Commerzbank said. “The fact that physical demand in India is already picking up should also preclude any more pronounced price slide. At even lower prices – for example below $1,200 per troy ounce – buying interest should increase noticeably again.

“We are nonetheless lowering our year-end forecast to $1,250 per troy ounce. The gold price should resume its upswing next year. One argument in favor of this is the extremely expansionary monetary policy that is still being pursued by the key central banks. Then there are the numerous uncertainties associated with several important elections in Europe and the various geopolitical risks. The dynamism of investment demand should therefore pick up again, which is why we are leaving our forecast of a gold price of $1,450 per troy ounce by the end of 2017 unchanged.”

Meanwhile, Commerzbank trimmed its year-end forecast in silver to $17.50 an ounce, commenting that this metal also is likely to come under pressure again if a Fed rate hike occurs next month.

“As soon as this event is out of the way, the silver price is likely to rise again, so we are sticking with our forecast of a silver price of $21 per troy ounce by the end of 2017,” the bank says.

Commerzbank also sees platinum and palladium rising next year, commenting that the platinum market is still in a supply deficit and speculative selling should abate. Commerzbank sees $1,000 platinum at year-end.

“The downward pressure on palladium from ETF sales appears to be easing,” Commerzbank says. “We therefore continue to see palladium at $625 per troy ounce at year’s end. We expect the prices of both precious metals to rise next year; by the end of 2017, platinum should climb to $1,250 per troy ounce and palladium to $725 per troy ounce.”

By Allen Sykora of Kitco News; asykora@kitco.com

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