Probabilities Continue to Favor Gold in Long-Term: Investec

Source:

Portfolio manager Daniel Sacks said today the institution's positive view was based on a combination of macro and supply-demand drivers. He said the "forces that propelled gold over the past five years were firmly in place, while policy prescriptions for the credit crisis appeared to be "powerfully and uniformly reflationary."

Investec remains bullish on the long-term outlook for the gold price, but warns that a stronger dollar could derail the positive outlook for gold.

Portfolio manager Daniel Sacks said today the institution's positive view was based on a combination of macro and supply-demand drivers. He said the "forces that propelled gold over the past five years were firmly in place, while policy prescriptions for the credit crisis appeared to be "powerfully and uniformly reflationary".

Investec believed gold would be well positioned into the final quarter of the year, when fabrication was expected to tighten the market. Although this did not map directly to gold prices, it did prepare the ground for macro catalysts to enter the market.

Sacks said that while it was impossible to forecast macro catalysts, systemic financial "stresses" intensifying in the US and spreading to Europe and emerging markets meant that probabilities favoured gold.

In the short-term, gold could consolidate within the $750-$1000 band, finding a floor at around $750/ounce as a lower price would result in mine closures.

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