BMO Forecasts New Heights for Gold, Precious Metals

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BMO Capital Markets Global Commodity Strategist Bart Melek suggests that rising food and energy inflation and the equity market are “adding luster for gold.”

BMO Capital Markets Global Commodity Strategist Bart Melek suggests that rising food and energy inflation and the equity market are “adding luster for gold.” In an equity research note published Tuesday, BMO projects gold and the precious metals complex in general to move higher into 2008. BMO's optimism, Melek said, “is driven by the view that inflation is starting to get entrenched globally, equity markets are set for a period of volatility owing to renewed central bank hawkishness and expectations that the U.S. dollar (trade-weighted) will continue to be in a weakened state…to help reverse the substantial global trade and current account imbalances.”

“Also quite supportive of the longer-term gold outlook is the expectation of rising wealth in India, China, the Middle East. Jewelry sales and the use of gold and other precious metals as a store of wealth in these regions are expected to become increasingly important,” Melek advised. Among other reasons BMO remains bullish on gold is that it is “also likely to be increasingly used as protection against financial market and geopolitical instability.”

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