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    Gold may climb to $1,500

    Synopsis

    Gold has climbed this year as investors weigh risks that Trump won't be able to implement his agenda, adding to uncertainty around European polls and Brexit.

    Bloomberg
    NEW YORK: Gold is poised to rally to levels last seen four years ago as rising inflation and negative real interest rates combine to boost demand, according to Incrementum AG, which says that the precious metal may be in the early stages of a bull market.

    Prices may climb to $1,400 to $1,500 an ounce this year, said Ronald-Peter Stoeferle, managing partner at the Liechtenstein-based company, which oversees 100 million Swiss francs ($101.5 million). Spot bullion -which was at $1,249 on Wednesday -last traded at $1,400 in September 2013.

    Gold has climbed this year as investors weigh risks that President Donald Trump won't be able to implement his agenda, adding to uncertainty surrounding European elections and the Brexit process. Against that backdrop, investors are on alert for signs of faster inflation, with the Federal Reserve's preferred gauge jumping recently to near the bank's target. Policy makers raised rates this month, and kept forecasts showing two more hikes in 2017.

    “For the short term, it's in a bit of a technical no-man's land, we also see that seasonality is not really favourable,“ Stoeferle said in an interview in Singapore on Tuesday . “The real pick up in momentum might start beginning of summer. It's in the very early stages of the bull market, so everybody is still kind of cautious or slightly negative, but this will improve.“

    Bullion is traditionally regarded as an effective hedge against rising inflation, gaining in value to help holders preserve their wealth. While higher US rates typically buoy the dollar and can hurt bullion, the commodity has advanced during previous hiking cycles. Trump's recent talking down of the greenback's strength should also be positive for gold, according to Stoeferle.

    Stoeferle manages 30 million Swiss francs in the renamed Incrementum Inflation Diversifier Fund, which he started in 2014 with partner Mark Valek. The fund uses its own inflation indicator, which is currently neutral to slightly negative. “As soon as we get the signal for rising inflation, we'll invest in inflation-sensitive assets again such as silver equities, gold equities, energy and the broad commodity complex,“ Stoeferle said.

    Not everyone is bullish. Societe Generale SA recommends selling on rallies as it sees gold declining amid further tightening by the Fed and only limited impact from political events. The bank has forecast an average of $1,125 in the fourth quarter. That's is line with the outlook for $1,230, according to the median of estimates compiled by Bloomberg. Earlier this year, BNP Paribas SA -the most accurate bullion forecaster in the final quarter of last year, according to Bloomberg rankings -also sounded a note of caution.



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    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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