This Is The Critical Element Needed To Drive Gold Prices Through $1,400 - ETF Securities
(Kitco News)- While thegold market continues to build bullish momentum, the market still needs one keyingredient that will ultimately drive gold prices through $1,400 an ounce,according to one investment firm.
In a recenttelephone interview with Kitco News, Maxwell Gold, head of investment strategyat ETF Securities, said that the market needs to see a resurgence of physicaldemand both in North American and critical emerging markets.
Whileinvestment demand is benefiting from rising volatility, stable interest rates,rising inflation pressures and a weak U.S. dollar, Gold said that the marketmight not have enough momentum to break its current range.
“Physicaldemand helps to provide ceiling and a floor for the market. Without thatphysical demand, investment demand just doesn’t get you to that new range,” hesaid.
Whilerenewed investor demand has helped push gold price to a recent five-week high,Gold said that the issue is that this speculative money has a habit of beingfleeting. He explained that strong physical demand is a lot stickier and helpsto create a stable price environment.
Although physical gold demand has beenlackluster so far in 2018, Gold said that he thinks it is only a matter of timebefore investors move back into the marketplace. He added that higher pricesdue to further uncertainty in equity markets continues to make gold anattractive safe-haven asset.
“Investorsare quietly trying to get back into the gold market because of the risks thatare growing in the global market place. Investors are still underweight gold,”he said. “My bullish case for gold this year calls for prices to be between$1,400 and $1,450 and I do think we can get there sooner if we see a continuedselloff in equities.”
Gold’scomments come as the yellow metal struggles to hold on to gains after pushingto a five-week high at the start of the week. April gold futureslast traded at$1,324.80 an ounce, down more than 1% on the day.
Gold addedthat he isn’t concerned with any near-term weakness in the market. He explainedthat lower prices make strategic investments in the precious metals moreattractive.
“Forstrategic holdings we see any dip below $1,300 an ounce is an attractive entrypoint that will be quickly bought,” he said.
By Neils ChristensenFor Kitco News
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