Gold prices could be set for a strong breakout in the second half of 2015, according to a commodities analyst.

Ole Hansen, head of commodity strategy at Saxo Bank, is slightly more optimistic on the gold market for 2015 compared with other analysts.

Hansen told Kitco News that the precious metal could end 2015 around $1,250 an ounce. But prices could struggle in the short term and could even break below the 2014 lows in the coming months, he said.

Hansen urged investors not to rule out gold's safe-haven investment appeal. Safe-haven demand could help the gold market in early 2015 as both the Russian and European economies are in dire straits.

Hansen forecast that gold prices could fall to $1,100 or even $1,080 per ounce at the beginning of 2015 amid sustained pressure from the US dollar. Demand for dollar-denominated commodities such as gold typically weakens on a stronger greenback as it makes the metal more expensive for holders of other currencies, lowering its hedge appeal.

Hansen said: "I still think we are going to end higher by [the] end [of 2015].

"Most of the weakness will be seen in the first half of the year, which ties in with the weakness in energy prices."

Gold Ends Lower

US gold futures for delivery in February finished $22.10, or 1.88% higher at $1,196.30 an ounce on 26 December.

However, prices were down 0.04% for the week as a whole. Bullion lost ground in a holiday-shortened week after data showed that US third-quarter GDP expanded at an annual rate of 5%, the most since 2003.

But not everybody believes the American economy is as strong as people perceive it to be.

Peter Schiff, CEO, Euro Pacific Capital, told Kitco last week that too many people believed in what he called a "phony [US] recovery" and warned that a rude awakening was coming when the US Federal Reserve, instead of raising rates, rolls out a QE4 to keep the world's leading economy from slipping back into a recession.