Make Kitco Your Homepage

VanEck sees gold price falling to $1,600 before it rallies to $3,000

Kitco News

Editor's Note: With so much market volatility, stay on top of daily news! Get caught up in minutes with our speedy summary of today's must-read news and expert opinions. Sign up here!

(Kitco News) - Gold prices have pushed solidly above last week's 10-month low; however, according to one portfolio manager, the precious metal still faces challenging headwinds as the outlook for the U.S. economy continues to improve.

In a report published last week, Joe Foster, portfolio manager for the VanEck Gold Strategy, noted that gold's price action has been disappointing since November when the market was particularly hard hit by the news regarding vaccines that could bring the COVID-19 pandemic under control.

'This, along with the $1.9 trillion stimulus bill, created an outlook for strong economic growth and euphoria in the markets," Foster said in his report. 'Gold, as a safe haven, will continue to struggle so long as this outlook prevails, possibly through the first half."

Because of the growing optimism surrounding the U.S. economy, Foster said that he is downgrading his short-term outlook for gold.

'We have downgraded our near-term outlook from a consolidation to a correction in which we expect gold to trade above $1,600," he said.

Currently, April gold futures last traded at $1,728.80 an ounce, up 0.52% on the day.

Although gold could continue to struggle in the next few months, Foster said that they expect to see a catalyst emerge in the second half of the year to drive gold prices higher. He added that he remains a long-term gold bull.

'The most likely catalyst would be excessive inflationary expectations. Inflation expectations have returned to pre-pandemic norms, although a number of developments suggest it could spiral out of control," 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.