Gold Is A Strategic Buy At Current Prices - ETF Securities
(Kitco News)- Althoughthe gold market is hovering near its lowest level in a year, one fund managersees the current price as an attractive entry point to build a strategicposition.
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| Maxwell Gold, director of investment strategy at ETF Securities by Aberdeen Standard Investments |
“Goldis down but far from out,” said Maxwell Gold, director of investment strategyat ETF Securities by Aberdeen Standard Investments in a telephone interviewwith Kitco News.
Goldsaid that he sees several factors that should help boost gold prices through tothe end of the year including a weaker U.S. dollar,a surprise rise in inflationpressures, and over-extended negative sentiment. He added that gold prices arelikely to average the year at $1,275 anounce.
“Iam paying attention to gold at these levels because they are below my base-casescenario and if gold were to slip below $1,200 that would be an even strongersignal that investors need to look at gold as a strategic asset,” he said.
Augustgold futures settled Monday’s session at $1,221.30 an ounce, down 0.14% on theday.
Healso pointed out that it is difficult to see gold prices going much below itsrecent 12-month low. Looking at sentiment, Gold said that the market couldn’tget any more negative than it already is. The latest trade data from theCommodity Futures Trading Commission showed that bearish speculative interestin gold is at historic levels.
“Thisnegative sentiment is not sustainable over the long-term. The market couldfluctuate a few percentage points from here, but I don’t see much furtherdownside risk for gold,” he said.
Asfor the U.S. dollar, Gold said that the greenback is still in a structural bearmarket, despite its 10% rally during the last three months. He added thatmomentum in the second quarter does not appear to be following through in thesecond half of the year, as the U.S. Dollar Index has struggled to break aboveits recent 12-month highs.
Goldexplained that growing deficits in a late-stage economic cycle will eventuallyweigh on the U.S. dollar in the long-term and push inflation pressureshigher. Rising inflation pressures, whichthreaten U.S. growth, will be a headwind for the greenback, he stated.
“Nobodyis talking about inflation that goes hand-in-hand with a late-stage businesscycle,” he said. “We see unprecedented complacency in the marketplace and thatis why we haven’t seen a flight to quality. However, we expect this sentimentwill shift in the second half of the year.”
Goldadded that a single spark could be enough to trigger a short-covering rallythat will eventually stabilize the prices at a higher level.
By Neils ChristensenFor Kitco News
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nchristensen@kitco.comwww.kitco.com 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.