NEW YORK (Kitco News) -- While the turmoil in global equity markets is weighing on the industrial metals this month, gold is benefiting from a revival of safe- haven demand, said research firm Capital Economics on Thursday.

Over the past month, precious metals' performance diverged sharply, with gold the only metal ending the month higher despite the U.S. Federal Reserve hiking interest rates in December for the first time since 2006.

Gold and silver are benefiting from safe- haven demand on the back of the fall in global equity markets, exacerbated by the recent oil price declines and escalating tensions in the Middle East, said Julian Jessop, commodity economist for the U.K-based firm.

In contrast, palladium and platinum fell by nearly 10% and 2% month over month, respectively, on fears that a slowdown in China would translate into lower demand for the metals.

Despite his renewed hope for gold, Jessop recently lowered the yellow metal's forecast for 2016 to $1,250 an ounce, down from his original call of $1,400 by year's end.

'The key driver of gold last year was the strength of the U.S. dollar and the anticipation of the U.S. Fed tightening,' Jessop said. 'We think they will remain major headwinds throughout the course of this year,' he added. Jessop noted that despite the recent turmoil in global equities, he expects the U.S. Fed to raise rates, and at a greater percentage than markets anticipate.

On a bullish note for gold, there are three key positives for the metal, Jessop said.

'A revival of safe-haven demand is lifting gold prices; pick up in inflation in the world's advanced economies and then the third is underlying strong demand from emerging economies and central banks,' he explained.

While all metals are still trading well below their 200-day moving averages, gold and silver have recently broken above their 50-day moving averages. This is normally considered a bullish signal for prices.

Support for gold should hold around the $1,000 level, Jessop suggested, adding that should a shock hit the global economy, prices could rally back to $1,400. His forecast of $1,250, 'straddles the middle,' he said.

Jessop said that if gold heads higher, then silver should outperform the metal. 'Silver tends to be a high-beta version of gold. It is reasonable to talk about silver to recover to $16-$18 dollars an ounce over the next year or so.'

February Comex gold settled Thursday's session 7.80 at $1,098.20 an ounce, down $7.60 on the day. March Comex silver settled down $0.066 at $14.094 an ounce.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

If you liked this article you might like

Owning Gold Is Not Optional, Every Investor Needs It - Strategist

Owning Gold Is Not Optional, Every Investor Needs It - Strategist

Look For Helicopter Money, Not Rate Hikes Says Marc Faber

Look For Helicopter Money, Not Rate Hikes Says Marc Faber

This Chart Shows That Trump May Actually Be Helping Gold

This Chart Shows That Trump May Actually Be Helping Gold

Gold Up, Then Down, But Investors Need Not Worry Says Expert

Gold Up, Then Down, But Investors Need Not Worry Says Expert

Expect Higher Silver Post 2015 Record Demand & Huge Deficit: World Silver Survey

Expect Higher Silver Post 2015 Record Demand & Huge Deficit: World Silver Survey