Q2 Could Help Gold; But Metal Still Ending Year at $1,100/oz - Forecaster
Monday April 18, 2016 13:18
(Kitco News) - One known forecaster remains bearish on gold, even if he expects this quarter to be a little more exciting for the metal.
Barnabas Gan, commodity economist for Oversea-Chinese Banking Corp. (OCBC), said he is sticking to his bearish calls for gold, looking for the metal to end the year at least $100 lower from current prices.
“We remain firm on our call for the FOMC to inject two more rate hikes this year, with the first one to come likely as early as June 2016,” he said in the OCBC’s latest commodities report released Friday.
“As such, an expensive greenback as a result should pressure gold lower to our year-end outlook of $1,100/oz.”
However, Gan noted that gold could take a cue from its stellar performance in Q1, and see some upside this quarter.
“Still, the second quarter this year should prove interesting for the precious metal complex, owing to several milestone events in June, including the Brexit referendum, OPEC meeting, and the overarching uncertainty over Greece’s access to the second tranche of money from the third bailout package,” he explained.
Aside from U.S. monetary policy, Gan said another factor that will weigh on gold later in the year includes lower demand from the world’s two largest gold-consuming nations – India and China.
Gan highlighted that gold demand out of China has been lackluster while Indian demand has been curtailed by recent tax hikes.
Monday, gold had given back morning gains as U.S. stock markets moved from slightly higher levels on the day. June gold was last down 30 cents at $1,234.30 an ounce after trading as high as $1,243.30 earlier in the session.