Hedge funds slash bullish wagers on gold over Trump election win
Hedge funds and other large speculators boosted net-long positions by 11% to 197,362 as of Nov. 12, the lowest in 14 weeks.
Gold prices are on their way up and they’ll continue to climb above $3,000 per ounce, precious metal expert and co-author of the book “The Energy World is Flat,” Diego Parilla, said Monday.
Speaking at The Dubai Precious Metals Conference in the United Arab Emirates, Parilla said central banks are helping to create a “perfect storm” and that by continuing to push and test the limits of monetary policy credit markets they could push gold prices above $3,000 per ounce within three years, Khaleej Times reports.
“The big problem is that monetary policy is contagious and central bankers no longer have any bullets left (…) [They] have no room to ease aggressively as they are already stretched,” he was quoted as saying.
Independent research company Capital Economics also predicts that gold’s rally this year is far from being over.
“In particular, we expect building inflationary pressures in the US to keep real interest rates low, boosting the attractiveness of gold as a store of value. What’s more, physical demand and supply dynamics should also play in favour of higher gold prices as global mine output is expected to plateau in 2016, after seven years of consecutive growth, and demand from central banks and key consumers should remain strong”
Capital Economics sees gold at $1,350 by the end of the year with a rising trend in 2017.
Gold prices have climbed in recent weeks amid expectations the US Federal Reserve would be more cautious raising interest rates this year.
At its March policy committee meeting, the Fed said it expected to raise rates two times this year, down from the four times it previously expected, amid concerns about the global economy. Higher rates make gold less attractive compared with yield-bearing assets.
The Fed’s gradual rate hikes have also weighed on the US currency, making dollar-denominated gold more attractive to other currencies holders.
3 Comments
karthik
Well – what will be the value of USD in comparison to other currencies in 2019? USD was at Rs. 68 (Indian currency) and now it is at Rs. 66.32. The price of gold now is $1260 and if value of USD drops 25% against Indian Rs. of any other currency for that matter, the gold price will be $1700 USD. But what is the net gain? For gold to be healthy, it should be de-linked with US currency and state of economy in US or Europe.
idea chireshe
Your suggestion is good Karthik, but please respond to ExPat.
JH
? really only USD 1350 by year end? and “only” USD 3000 by 2019? My prediction is that whatever currency a person has it will be at least 3x increase in value in your currency, could be 5x in USD.