Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

Gold industry analysts expect price boost from currency war fears

Published 22/08/2015, 17:41
© Reuters. Customers look at gold jewellery displayed at a shop in Amman
BNS
-

By Rajendra Jadhav

PANAJI, India (Reuters) - Gold prices could rise above $1,200 an ounce in the next few months as fears of a currency war following the devaluation of the yuan make equity markets choppy, boosting physical gold and ETF buying, leading industry analysts said at a conference.

The metal has already rebounded about 8 percent from July's 5-1/2 year low, boosted by minutes of the Fed's last policy meeting that dented expectations for an imminent rise in U.S. rates. Spot prices hit a peak of $1,168.40 on Friday.

"After the devaluation of the Chinese currency, people are worried," said Rajan Venkatesh, head of India bullion at ScotiaMocatta, part of Canada's Bank of Nova Scotia (TO:BNS). "They are afraid of a currency war. They are going back to gold."

Prices could rise to $1,230 to $1,240 within a month, he said on the sidelines of the International Gold Convention in the city of Panaji in western Goa state.

Michael Mesaric, chief executive of the world's biggest gold refiner, Valcambi, said deposits in gold-backed exchange-traded funds are hovering near their lowest levels since 2008 but current prices will attract new buying.

He expects gold prices to rise to $1,350 by mid 2016.

The recent bounce notwithstanding, gold has been under heavy pressure this year from expectations the Fed would raise rates for the first time in nearly a decade, lifting the opportunity cost of holding non-yielding bullion while boosting the dollar.

But analysts like Jeffrey Rhodes, founder of Dubai-based precious metals consultancy RPMC, said: "All the bad news for gold is in the press".

© Reuters. Customers look at gold jewellery displayed at a shop in Amman

"There is room in the world for strong dollar and strong gold," said Rhodes, expecting higher demand in countries such as India, China and Greece, where currencies are depreciating. "And strong gold is an alternative to emerging market currency."

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.