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Gold to fall to $1,750 by year end - Bannockburn Global Forex
(Kitco News) - The gold market is holding up well, but it faces competition with rising interest rates, a red-hot equity market and resilient strength in the U.S. dollar, according to one market strategist.
In an interview with Kitco News, Marc Chandler, managing director at Bannockburn Global Forex, said that the precious metal has started July off on solid footing, with today being only the third down day in the last 12 days. However, he added that he doesn't see gold prices getting above critical resistance at $1,850 an ounce.
Looking to year-end, Chandler said that he sees gold prices trading around $1,750 an ounce. He added that gold appears to be stuck in a broader range between $1,500 and $2,000 an ounce.
Chandler pointed out that there is not much new information to drive gold prices higher and the current environment is more conducive to equity markets and the U.S. dollar.
"I'm not so sure that gold serves the same function that people used to think of had as we face a new financial industry of [exchange-traded funds] and passive investing," he said.
Although there are expectations for strong economic growth through the rest of the year, Chandler said that he is not convinced these forecasts will be met. He described the current economic momentum as a sugar high that can't be last.
He added that he already sees signs of the global economy peaking.
"By the second half of next year, when we talk about 3% growth, it will be from the rearview mirror. So if the world is going to slow down towards the end of this year, I have to put gold may be at $1,750," he said.
"I'm not so positive on gold, not because of the debt levels or unsustainable levels of valuation in other asset markets, whether it's house prices or stocks and bonds, but I'm more concerned about a general economic slowdown taking down risk capital in general," he added.
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