SAN FRANCISCO (MarketWatch) — Don’t expect to see much of a climb in gold prices this year, but a spike to $1,700 an ounce or more could come as early as the summer of 2016.
Gold futures prices on Comex closed at $1,210.10 an ounce on Thursday, with the metal stuck in a range of just over $114 an ounce year to date, based on the most-active contracts.
“Gold will see another parabolic bull run from July 2016,” speculated Chintan Karnani, chief market analyst at Insignia Consultants. Until then, “gold investors need to have the patience and not get scared by more price falls.”
Prices may reach $1,700 or higher between June 2016 and November 2016, he said.
For the month of February, prices for the metal lost roughly 5%, though trade more than 2% higher for the year so far. By the end of 2014, gold prices were down 14% from their peak of $1,379 that year.
Karnani said he believes the U.S. Federal Reserve isn’t likely to raise interest rates until after June 2016 and the dollar DXY, +0.00% will see significant weakness just before the U.S. presidential voting period, which he defines as July 2016 to October 2016.
The market will also have to consider Chinese and Indian gold demand, which will be the key drivers for gold to “break past key long-term technical resistances,” he said
The wait for the price spike isn’t that bad, considering that an analyst at Bank of America Merrill Lynch recently told CNBC that gold investors would have to wait about two years to see prices rise to $1,500 to $1,600.
Francisco Blanch, commodities analyst at B.of A., attributed his longer-term positive outlook on gold prices, in part, to the growing number of negative-yielding bonds, particularly in Europe, according to CNBC.
Indeed, bonds have been a traditional safe-haven for investors but given debt levels today, they “may be the epicenter of the next financial crash,” said Mark O’Byrne, a director at GoldCore. That would make gold attractive from a “diversification point of view.”
Brien Lundin, editor of Gold Newsletter, is bullish on gold longer term. “Eventually, uncertainty in currencies, negative interest rates overseas and, above all, the mountainous levels of debt amassed by Western economies and Japan will make a much higher gold price inevitable,” he noted.
Myra P. Saefong – Marketwatch – February 27, 2015