Credit Suisse: Gold will hit $1350 within the next year
YouTube/The Secret World of Gold
Once again these are golden times for gold. The precious metal has regained some of the strength it lost over the last year after having a record high quarter in 2016. Gold prices gained 16% to 17% in the first quarter and are currently at $1,235/ounce. According to analysts at Credit Suisse, the precious metal is going to follow an upward trajectory throughout this year.
Gold prices will hit $1,350/oz in 1Q2017
Michael Slifirski and Nick Herbert write in their FX and Commodities quarterly review that gold prices will peak at $1,350/ounce in the first quarter of 2017. The report further states that gold is likely to keep rising until the global economy stabilizes against fears of recession. Credit Suisse predicts a pullback in gold prices at the beginning of 2018 as real interest rates turn upwards. The CS analysts state their long term price estimate to be $1,200/ounce, reasoning that at this level, the demand and supply equation will be relatively balanced.
Market bears like Soceiete Generale’s Albert Edwards have already predicted that a recession in the U.S. has become inevitable. With all the doom and gloom, gold is bound to move further up as investors tend to grab “safe haven” assets in a bearish market. Other factors that are helping gold prices is the weaker U.S dollar and Federal Reserve’s decision not to hike rates.
Hedge funds and investment banks have once again become huge buyers of gold. There has been record buying in gold ETFs in the first quarter. The sudden price rally must have hurt the record number of short positions on gold futures that were held until the end of 2015.
YouTube/The Secret World of Gold
YouTube/The Secret World of Gold
YouTube/The Secret World of Gold
YouTube/The Secret World of Gold
Copper prices will be hit by continued lower consumption
On the subject of copper, Credit Suisse analysts are less optimistic. The report says that demand from Chinese markets is expected to catch up more slowly than they had thought and that this will have a negative effect on copper prices. Their new estimate for copper prices in 2018 is $1.80/lb, down 30% from their previous number. The report says that the current consumption rate for copper is the “new normal.”
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