Another Bear Turns Bullish On Gold; OCBC Sees $1,400 By Year-End
(Kitco News)- Investors appear to be shunning gold onceagain as the geopolitical tension continue to ease but one international banksays that investors should at least keep one eye on the yellow metal as priceslook to increase through the rest of the year.
In a research report published Monday, BarnabasGan, commodity economist at OCBC Bank, said that he was raising hisgold forecast, reversing his bearish outlook.
Gan said that he now sees gold prices endingthe year at $1,400 an ounce, up significantly higher from his previous year-endforeast of $1,150 an ounce.
Further weakness in the U.S. dollar andongoing geopolitcal turmoil will support the yellow metal’s uptrend through tothe end of they year.
Gan’s comments come as the yellow metalstruggles to find momentum as investor sentiment shows some improvement throughfinancial markets. However, despite the selling pressure, the gold marketcontinues to hold have key support at $1,325 an ounce.
Gold prices are suffering as the U.S. dollar finds some momentum and as U.S. 10-year bond yields hit a four-year high at2.97%.
While geopolitical tensions has easedlately, Gan warned investors that they have not been completely removed fromthe marketplace. Particularly, the threat of a trade war contines to loom inthe shadows, he said.
“Despite the positive rhetoric by both USand China, it is important to note that the Trump-led tariff threats of a totalof US$150 billion worth of Chinese imports have not been officially rescinded,”he said. “China’s tariff proposals of US$50 billion worth of US imports aresimilarly left on table as a response against US’ tariff moves.”
Gan added that if tensions between the U.S.and China esclate, he would expect to see further selling pressure in equitymarkets, which would benefit gold prices. He added that a trade war would havea disasterous impact on the global economy, dragging down base metal and crudeoil markets.
“We opine that should trade tariff proposalsturn concrete, growth-related commodities could potentially trend similarly toa growth-recessionary year (crude oil, base metals: -10% to 30%), while safehaven demand into gold will lift the yellow metal beyond $1,600/oz,” he said.
By Neils ChristensenFor Kitco News
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