Gold Price Should Be At $1,500 By Year End - Incrementum AG
(Kitco News)- Gold investors are taking profits Tuesday, as the U.S.dollar found some traction, bouncing off fresh three year lows, but one fundmanager says that gold will be the asset to own in 2018 as the risk ofstagflation in the U.S. economy rise.
In a recent interview with Kitco News, Ronald-PeterStoeferle, fund manager at Incrementum AG and author of the annual In Gold WeTrust report, said he could see strong momentum pushing gold prices through$1,500 an ounce by the end of the year. The yellow metal will be supported byrising inflation, lower economic growth and a weaker U.S. dollar.
April gold futures last traded at $1,331 an ounce, down almost 2% on the day.
“I don’t know how far gold prices can rise. We are at thestart of a new bull market and I see gold easily at $1,500 an ounce by the endof the year.”
Stoeferle said that gold remains an attractive asset asvolatility rises, as the U.S. economy is late in its growth cycle. He addedthat expected infrastructure spending and the passage of historic tax cuts inthe U.S. would drive inflation higher, without having a significant impact ongold.
“The U.S. and global economies are not as strong aspeople might think,” he said. “Surprise inflation around the world is going tobe a major issue going forward. Economic growth will be sensitive to higherinflation.”
Stoeferle added that rising inflation would continue tohelp gold prices withstand higher bond yields. Tuesday saw U.S. 10-year bondyields at 2.9%, its highest level in four years. Stoeferle added that he doesn’t see yieldsrising much above 3% in 2018 as global demand, in a low rate environment, willsee U.S. debt as an attractive investment.
However, he added that even the global market will haveits limit for U.S. debt, which will keep the pressure on the U.S. dollar,adding further tailwinds for gold prices.
“The deficit right now is ridiculous. The government isspending so much money, and they aren’t in a recession yet. What is going tohappen when the U.S. does fall into a recession,” he said. “I am expecting tosee a weaker U.S. dollar.”
By Neils ChristensenFor Kitco News
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