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I would not describe gold's behavior as a safe haven. I would say it is currently looking more like a risk asset than a safety trade. However, I think there is a scope for gold to reemerge as a safe asset. It very much depends on how the U.S. handles the fiscal cliff, and hence currently the market is closely watching developments in the U.S.
What other factors might influence gold prices in the nearest future?
I think gold is still very much a Dollar play, it is very much linked to the value of the U.S. Dollar. I do not expect any changes in that respect in the near term.
What is your forecast for gold prices for the end of the year?
We are actually still quite bullish on gold. We would expect gold prices to continue to rally. We do face a resistance around $1740 to $1750, but if gold can break it, which we think is possible, gold should end the year around $1780.
What is your long term forecast for gold prices in 2013? Would you agree with Deutsche Bank, which said that gold could rally to a record above $2000 an ounce next year?
Our forecast for gold at the end of the year is around $1890. That is a cyclical peak. We see upside risks to that and the record high is only about 30$ above that level. We may see gold take out a new high. I think the main risks to our target of $1890 include more measures by the United States to keep policy easy and resumed inflationary pressure in China that could be the catalyst for quite a strong rally. In particular, the key to China are real interest rates, and if we see negative real interest rates in China, I think that we could actually see quite a strong pick up in gold demand. Demand for gold from China is already very strong; but I think we might see it going even higher in a negative interest rate environment.