Gold price to break record by year-end; bullion premiums normalizing - Peter Hug
Gold prices could see 2011 highs of $1,920 an ounce or higher, said Peter Hug, global trading director of Kitco Metals, who noted that a full economic recovery won’t materialize until later next year.
While seasonal softness is expected for the yellow metal during the summer months, the medium term trajectory is still constructive, Hug said.
“Short-term, especially given the seasonal factors, [gold prices] have a bit of softness, but by year-end I think the 2011 high in gold, which is $1,920, will be there or higher,” he said.
Pandemic fears are still far from over, Hug said, and many fundamental risks to economic growth are likely to remain until at least next year, noting that unemployment unlikely to fall below 10% by year-end, in contrast to the Federal Reserve’s projection of 9% by year-end.
Prolonged damage to the economy could see another correction in equities, he added, and should another correction take place for risk assets, gold may be pulled down with stocks before another rally were to take place.
“I don’t think that would be bullish for the metals. I think the initial reaction for the metals would be lower as people begin to panic and start to raise cash,” he said.
Meanwhile, bullion premiums have come down for most products.
“A couple of weeks back when I was on the show, I indicated that we strongly advised our clients not to buy physical and chase the premiums and our clients have been rewarded accordingly. Gold Buffalo and Eagle premiums have come down to pre-COVID prices,” he said, adding that some logistical challenges for transporting bullions across the globe still remain.