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Another Bear Turns Bullish On Gold; OCBC Sees $1,400 By Year-End

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(Kitco News) - Investors appear to be shunning gold once again as the geopolitical tension continue to ease but one international bank says that investors should at least keep one eye on the yellow metal as prices look to increase through the rest of the year.

In a research report published Monday, Barnabas Gan, commodity economist at OCBC Bank, said that he was raising his gold forecast, reversing his bearish outlook.

Gan said that he now sees gold prices ending the year at $1,400 an ounce, up significantly higher from his previous year-end foreast of $1,150 an ounce.

Further weakness in the U.S. dollar and ongoing geopolitcal turmoil will support the yellow metal’s uptrend through to the end of they year.

Gan’s comments come as the yellow metal struggles to find momentum as investor sentiment shows some improvement through financial markets. However, despite the selling pressure, the gold market continues to hold have key support at $1,325 an ounce.

Gold prices are suffering as the U.S. dollar finds some momentum and as U.S. 10-year bond yields hit a four-year high at 2.97%.

While geopolitical tensions has eased lately, Gan warned investors that they have not been completely removed from the marketplace. Particularly, the threat of a trade war contines to loom in the shadows, he said.

“Despite the positive rhetoric by both US and China, it is important to note that the Trump-led tariff threats of a total of US$150 billion worth of Chinese imports have not been officially rescinded,” he said. “China’s tariff proposals of US$50 billion worth of US imports are similarly left on table as a response against US’ tariff moves.”

Gan added that if tensions between the U.S. and China esclate, he would expect to see further selling pressure in equity markets, which would benefit gold prices. He added that a trade war would have a disasterous impact on the global economy, dragging down base metal and crude oil markets.

“We opine that should trade tariff proposals turn concrete, growth-related commodities could potentially trend similarly to a growth-recessionary year (crude oil, base metals: -10% to 30%), while safe haven demand into gold will lift the yellow metal beyond $1,600/oz,” he said.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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