Gold Prices Have Room To Move $100 Higher - Vince Lanci
(Kitco News) - Gold is up 6% since the Fedraised rates last month, despite net outflows in North American-basedgold-backed exchange traded funds, but one trader said that not all investors arefleeing from the yellow metal.
In an interview with KitcoNews, Vince Lanci, founder of Echobay Partners, said that he is shrugging offthe impact of recent outflows in SPDR Gold Shares, the world’s biggestgold-backed ETF.
“GLD, has dropped about 10 tonnes over the lastthree to five weeks, what you’re seeing is small retail [investors] get out,and larger funds get in at this time,” Lanci told Kitco News. “The outflows area function of people that need to sell gold to buy iPhones and pay theirexpenses.”
Despite weak North Americangold ETF demand, European markets have seen strong inflows. Earlier this week,the World Gold Council reported that global ETF demand increased by 197.5tonnes in 2017, driven by a 75% increase in total inflows in Europe.
Despite headwinds of astronger stock market and rising bond yields, gold has seen a strong start tothe New Year. February gold futures settled Thursday at $1,322.50 an ounce, near its 3.5-month high.
Lanci said it’s “erroneous” tobelieve that gold will sell off, falling below the key psychological level of$1,200, just because interest rates are rising. He added the key for gold is tolook at real interest rates.
“Real interest rates are stilllow. There’s more risk in a 2% bond than there is in $1,200 gold,” Lanci said.
The veteran trader maintaineda bullish stance on gold going into the new year. Lanci said he could see goldprices climb another $100 within the next three to six months, due to apotential correction in equity markets.
“My target is actually higherthan $1,700 [an ounce] but I would be happy with $1,700,” Lanci said, “gold isnot determined by financials, by supply....it’s determined by emotion. That meansyou have to look at how it’s managed by people who don’t want the price higher,and how it’s let loose by people who don’t care that much.”
By Kitco NewsFor Kitco News
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