130,000 oz of Gold / year - Q4 2009
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Message: OT: Gold price bottoms out, could ‘rally to $2,400′
Gold price bottoms out, could ‘rally to $2,400′
The gold price was steady in Tuesday morning trading, drifting less than 0.5 percent lower but continuing to hold up well after bouncing off resistance near its three-year low on the last trading day of 2013.
The spot gold price was last at $1,248.90/1,249.70 per ounce, down $5.85 on the close but having straddled $1,250 for more than a week.
While most analysts are still bearish on gold in light of 2013's price decline, some have taken heart from the metal's failure to break through $1,180 and now believe the market could embark on the next leg of a rally.
"I think the bottom is in," Mark O'Byrne of GoldCore told FastMarkets exclusively on Tuesday. "In the short term, we may see some volatility but we have seen a very strong double-bottom form at $1,180 and I believe it will hold."
"In the short-to-medium term, we may see prices test lower again but I would be very surprised if they do break through," he added.
They could rally as high as $2,400 over the next three to five years, O'Byrne believes, which would be an all-time high, beating the previous record price of $1,921.10 per ounce set in September 2011.
"China will still be a big driver, but I also believe Western demand may return. If inflation materialises, the gold price could well benefit," he said.
O'Byrne was relatively sanguine about Deutsche Bank's decision to withdraw from the daily gold and silver fix and the reporting of the GOFO rate.
"I don't think this will have a big impact on the market. Deutsche Bank has probably taken a pragmatic decision in light of the concern surrounding the fix," he said.
"[But] what regulators should be more concerned about than the fix - which broadly reflects market forces - is Comex trading, where we have seen several instances of mysterious hammering of prices. If manipulation is happening anywhere, it is on Comex," he added.
"Even this morning, there was some very interesting price gyrations and I think this is what the regulators should be looking into," he said.
The economic agenda is focused on Europe today - German and EU ZEW economic sentiment, Spanish house prices and UK CBI industrial orders expectations are all due.
The US was on holiday yesterday to mark Martin Luther King Day and volumes are still restricted this morning but trade should pick up again later.
Macroeconomic stimulus should pick up towards the end of the week, when eurozone PPIs will be released, as well as the high-profile HSBC Chinese PMI.
Market participants are also cautious ahead of the Federal Reserve's Federal Open Market Committee next monthly meeting next week. At its meeting in December, it withdraw $10 billion per month from its quantitative easing programme to $75 billion; a further cut is possible this month.
In the rest of the precious metals complex, the platinum group metals are still not capitalising on confirmation that industry-wide strikes will start in major producer South Africa.
Platinum was $8 lower at $1,454/1,459 per ounce and the palladium price was $1 down at $744/749.
The silver price was this session's largest loser, dipping 24 cents or 1.2 percent to $20.05/20.11 per ounce.
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