Gold Bounces Off Five-Week Low As Investors Search For Safe-Havens - Analysts
(Kitco News)- Gold prices have bounced off a five-week low, finding newtechnical momentum because of safe-haven demand according to some analyst.
April gold futures have pushed to session highs Thursday afternoon-- last trading at $1,319.90 an ounce, up 0.40% on the day -- as equity marketsacross the board push lower. At one point the Dow Jones Industrial Average wasdown more than 600 points intraday.
Sean Lusk, director of commercial hedging with WalshTrading, said that in these current market conditions he expects gold tocontinue to do well as fund managers take more defensive positions in themarketplace.
“There is no impetus to short gold in the face of massiveuncertainty and volatility,” he said. “Prospects for gold down the road arelooking pretty rosy.”
George Gero, managing director with RBC Wealth Management,agreed that investors are now starting to take notice of gold as a safe-havenasset.
“We are seeing bargain hunters come in who are trying tohedge against volatility and rising inflation fears,” he said.
Gold’s bounce off a five-week low comes as the U.S. dollarpushes higher as it managed to hit a two-week high. However, Lusk said thatwith rising “risk off” sentiment in the marketplace, gold and the U.S. dollarcan rally in tandem.
However, while analysts see further potential for gold, theoutlook for the U.S. dollar is not as clear. U.K.-based research firm CapitalEconomics said that it had abandoned its higher dollar outlook. In a reportThursday the firm said that it doesn’t see a complete collapse in thegreenback, but it is not expecting to see any material strength either.
Currency analysts at TD Securities said that they prefer tosell rallies in the U.S. dollar as the market remains stuck in a bear market.
Renewed momentum in gold comes on the same day that GoldmanSachs updated its forecast for the yellow metal. The globalinvestment firm said in a report Thursday that gold could push to $1,450 in ayear.
The firm said that they think gold has room to move higheras the U.S. dollar loses more ground to emerging market currencies. At the sametime, they said that gold also looks attractive as a hedge against “systematicrisk” if equities see a deeper correction.
By Neils ChristensenFor Kitco News
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nchristensen@kitco.comwww.kitco.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.