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Gold's Target Is $1,520 - Pepperstone Group

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(Kitco News) - Gold price trends should continue with a target of $1,520 in the medium-term, said Chris Weston who heads research at Pepperstone Group.

“If this case plays out that we see this central bank easing to the extent that the swaps and rates markets are pricing, and I think you’d be looking at those 2011 lows at around $1,520 [an ounce] as your 12-month, 15-month price target,” Weston told Kitco News.

Weston said that gold still needs to find support before a sustained uptrend can be confirmed.

“We’ve got this break out of the March 2016 trend. That comes down to the neckline now, and the breakout point comes in at around $1,360 [an ounce], so if we can get a move down there, a retest and subsequently a rally off that to confirm that that’s now support, a lot of gold bulls will be taking that very clearly and that will give us a good opportunity to average into new positions,” he said.

Weston’s comments come as gold pared back its gains in late June but rallied again on Tuesday with spot gold closing 2% above Monday’s price at $1,413.70 an ounce.

He added that the U.S. dollar is likely to see downward pressure, although not a lot while central bank easing would provide tailwinds for gold.

“We think that this situation where we’re all going to see central bank easing does reinforce the idea that gold prices have decent appreciation going forward. I think what we’ve seen from this run-up through June is a glimpse into what’s going to happen over the next one to two years,” he said.

The broader market has is more interested in gold since the price run-up, Weston noted, and the trend is likely to continue as long as monetary policies remain dovish.

“You could see that the gold price got very extended, and I think that is a reflection that so many people were seeing gold as a currency in its own right--the best house in a bad neighborhood if you want to call it that. This idea that you would get this radical shift down in central bank easing and gold and bitcoin to an extent was being used as a vehicle to express that,” he said. “Things have gotten a little bit stretched, but certainly I think that’s going to be a phenomenon that we will see for the rest of the year, and I think that’s quite attractive for gold bulls.”

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