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Gold To Hit $1,400 In Q4 - Bank Of China International

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Gold To Hit $1,400 In Q4 — Bank Of China International

(Kitco News) - As gold prices trade close to four-month highs, analysts from the Bank of China International said that commodities like gold have room to go even higher in 2018.

By the fourth quarter of this year, gold could be looking at an average of $1,400 per ounce and copper at $7,500 a ton, analysts, led by Xiao Fu, the commercial bank’s head of commodity market strategy, said in a note this week.

“In a world of upbeat economic growth, USD weakness, falling bond prices and elevated equity valuations, the commodities revival should come into full bloom,” analysts wrote.

The optimistic outlook comes at a time when commodities are doing well, with spot gold on last trading at $1,322.0 an ounce, up 0.43% on the day, and copper last at $7,140.50 a ton, up 0.70% on the day.

This week, gold benefited from confusion around whether or not China will continue to buy U.S. Treasuries. 

Bart Melek, head of commodity strategy at TD Securities, said that while China has dismissed reports that it is looking at reducing its bond purchases, the idea is still out there.

“Once that idea is out in the marketplace, it is hard to take it back,” Melek noted. “I’m not sure that markets believe everything that is being said and that is good for gold.”

Kitco’s senior technical analyst Jim Wyckoff wrote on Thursday that gold was lifted by a lower U.S. dollar index and by higher crude oil prices, which hit a three-year high. 

“U.S. stock indexes hit new record highs Thursday, but the competing asset class gold still managed gains, which is impressive to the yellow metal bulls and hints of more upside for gold,” he said. “The key outside markets on Thursday saw the U.S. dollar index solidly lower. The greenback bears have the firm overall near-term technical advantage.”

Bullish calls for gold have been multiplying after the year began on a strong footing. Vince Lanci, founder of Echobay Partners, told Kitco News that his target for the next 12-18 months is higher than $1,700 an ounce.

“Gold is not determined by financials or by supply. It’s determined by emotion. That means you have to look at how it’s managed by people who don’t want the price higher … I think we have another $100 of upside here for this run, over the next three to six months,” Lanci said. 

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