Gold Lull To End By Late-September - State Street Global Advisors
(Kitco News)- Investors will have to wait a few more weeks before the goldmarket is ready to shake off its summer lulls, according to one gold marketanalyst.
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| Milling-Stanley, head of gold investments at State Street Global Advisors |
In an exclusive interview with Kitco News, GeorgeMilling-Stanley, head of gold investments at State Street Global Advisors, saidthat he is expecting buying momentum to pick up by the end of September afterthe Federal Reserve raises interest rates for a third time this year andphysical demand from important gold consumer nations increases in preparationfor important holidays.
Gold’s summer doldrums can’t end fast enough as the market iscaught in a four-month downtrend. However, looking ahead, Milling-Stanley saidthat the market could recover just as quickly as it sold off. He added that goldprices could climb back to $1,350 by the end of the year, but said that thefirst hurdle comes in at $1,250 an ounce.
“I think we could see $1,350, but it depends on how quicklymomentum builds in the marketplace,” he said. “I will be happy to see pricesabove $1,250 as that has been the mid-point of the trading range we have beenin since Mid-2013,” he said.
Milling-Stanley’s comments come as gold prices are holdingabove critical support at $1,200 an ounce. Gold prices have dropped from arecent two-week high as the U.S. dollar attracts new interest in the midst agrowing currency crisis in emerging markets.
Some investors have been optimistic that the growingemerging market uncertainty will support gold prices by forcing the FederalReserve to stop raising interest rates. But Milling-Stanley said he remains unconvincedthat this could shift U.S. monetary policy.
“The Federal Reserve runs its policy for the benefit of itsown country,” he said. “The U.S. economy is at the top of the Fed’s agenda andbecause of that we should see a rate hike in September and fourth rate hike inDecember.”
Currently, markets are pricing in a more than 90% chance ofa September rate hike and a 70% chance of a fourth rate hike at the end of theyear.
Milling-Stanley added that confidence is falling that theU.S. central bank will continue to raise interest rates past 2018. He explainedthat inflation pressures are still not roaring higher, which suggests limitedeconomic growth moving forward. Early Thursday, the U.S. Department of Commercesaid that its Core Personal Consumption Expenditures Index, the FederalReserve’s preferred inflation measure rose to 2% for the first time since 2012.
Looking at emerging markets, Milling-Stanley stated thatglobal gold demand could pick up as consumers buy the yellow metal to combatthe ongoing debasement in their currencies.
“I think we will continue to see good solid global demandfor gold through the rest of the year,” he said.
Milling-Stanley also said that he sees gold prices pushinghigher late in the year as investors pay more attention to geopolitical turmoilas the U.S. quickly approaches the November mid-term elections.
“According to political pundits, there is a veryreal possibility of change in both the House and the Senate,” he said.“Investors have been desensitized to geopolitical risk; but, for the remainderof the year I see this having greater focus.”
By Neils ChristensenFor Kitco News
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