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This Is The Critical Element Needed To Drive Gold Prices Through $1,400 - ETF Securities

Kitco News

(Kitco News) - While the gold market continues to build bullish momentum, the market still needs one key ingredient that will ultimately drive gold prices through $1,400 an ounce, according to one investment firm.

In a recent telephone interview with Kitco News, Maxwell Gold, head of investment strategy at ETF Securities, said that the market needs to see a resurgence of physical demand both in North American and critical emerging markets.

While investment demand is benefiting from rising volatility, stable interest rates, rising inflation pressures and a weak U.S. dollar, Gold said that the market might not have enough momentum to break its current range.

“Physical demand helps to provide ceiling and a floor for the market. Without that physical demand, investment demand just doesn’t get you to that new range,” he said.

While renewed investor demand has helped push gold price to a recent five-week high, Gold said that the issue is that this speculative money has a habit of being fleeting. He explained that strong physical demand is a lot stickier and helps to create a stable price environment.

 Although physical gold demand has been lackluster so far in 2018, Gold said that he thinks it is only a matter of time before investors move back into the marketplace. He added that higher prices due to further uncertainty in equity markets continues to make gold an attractive safe-haven asset.

“Investors are quietly trying to get back into the gold market because of the risks that are growing in the global market place. Investors are still underweight gold,” he said. “My bullish case for gold this year calls for prices to be between $1,400 and $1,450 and I do think we can get there sooner if we see a continued selloff in equities.”

Gold’s comments come as the yellow metal struggles to hold on to gains after pushing to a five-week high at the start of the week. April gold futures last traded at $1,324.80 an ounce, down more than 1% on the day.

Gold added that he isn’t concerned with any near-term weakness in the market. He explained that lower prices make strategic investments in the precious metals more attractive.

“For strategic holdings we see any dip below $1,300 an ounce is an attractive entry point that will be quickly bought,” 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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