We think the environment is conducive to higher gold prices, despite the spectre of a US rate hikes in June and September. Much debate has taken place over the impact of rising US interest rates on gold, but we don’t see it as a negative. Gold has pushed higher in all but one of the past seven rate-hike cycles since the 1970s. It has also outperformed in the cycles where interest rates were increasing relatively slowly. Even without the support of safe-haven buying, we anticipate a strong environment over the next 12 months. We are also observing signs of an improving physical market. Demand in India and China have in recent months rebounded sharply from a low base. Issues around demonetisation in India are abating, while a sharp pick-up in China’s gold imports suggest previous constraints have also eased.Gold rose to around $1,295 an ounce earlier this month, but was trading around $1,267 an ounce in late Asian trading on Wednesday. The last time gold traded above $1,300 an ounce was back in November.
Over the long term, Hynes has a very bullish forecast for gold:The gold price is likely to rise above USD2,000/oz by 2025. This is our central case for the gold price. While prices may trade only marginally higher over the next few years, we believe the combined effect of greater demand from investors and central banks will see gold prices rise over the long term.
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BENGALURU, FEB 27:
Gold prices held firm on Monday near 3-1/2 month highs hit in the previous session, with investor...
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