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Credit Agricole Analysts See 'Scope For Gold To Trend Higher'

(Kitco News) - Credit Agricole sees gold trending higher into 2017, commenting that improvement in risk sentiment for other markets does not necessarily mean markedly lower demand for the precious metal.

The bank projects gold will be at $1,250 an ounce in December and $1,320 by December 2017. Spot gold was at $1,218.95 just before noon EST after earlier holding just above $1,200 an ounce.

Risk aversion has been elevated so far in 2016, even though major central banks such as the Bank of Japan and European Central Bank have become more dovish, Credit Agricole said. This sentiment does seem to be starting to stabilize, the bank said.

“However, even if risk sentiment were to improve, this does not necessarily have to translate into considerably lower demand for hard assets such as gold,” the bank continued. “This is because central banks such as the BOJ and ECB will be slow in reacting to improving conditions. Hence, currency debasement fears will remain an important factor in keeping precious metals in demand.”

Further, the U.S. dollar is unlikely to generate the same upside momentum as in 2015, Credit Agricole said.

“In fact, we expect the currency’s appreciation trend to come to an end in the second half of the year,” Credit Agricole said. “This is due to limited room for central-bank monetary-policy expectations to diverge further. As a result of the conditions outlined above, we see scope for gold to trend higher towards the end of the next year.”

By Allen Sykora of Kitco News;



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