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Commerzbank Maintains Year-End $1,300 Gold Forecast

Kitco News

(Kitco News) - Commerzbank looks for investors to keep buying gold in the months ahead due to political and economic uncertainty on both sides of the Atlantic Ocean, commenting that any price retreats are likely to be limited.

As a result, the German bank Thursday upwardly revised its first-half forecast to $1,250 an ounce and maintained its year-end forecast of $1,300.

Some 55 tonnes of gold flowed into exchange-traded funds during the first two months of the year due to much political uncertainty in the U.S. and Europe, Commerzbank said.

“U.S. President Trump causes uncertainty with his policy,” the bank said. “In Europe, important elections are due in several major countries, which could put the EU (European Union) and the euro zone to a test. Also, the U.K.’s exit negotiations with the EU should start shortly. We therefore see gold well supported despite expectations of rising interest rates in the U.S.”

In the case of the U.S., Commerzbank cited worries about protectionism and isolationism under President Donald Trump. Meanwhile, there is potential for anti-EU parties to gain ground in a number of European nations, and the Greek debt crisis is flaring up again.

Commerzbank suggested the upside potential for silver “has been exhausted for now” after the net-long, or bullish, position of speculators nearly doubled since the end of 2016 and is only 20% below the record level from last July. By contrast, gold net length is still 70% below its record level.

Still, Commerzbank said, “silver should move in step with gold. We confirm our year-end forecast at $19 per troy ounce.”

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