Sunday, August 14, 2016

Why Gold at $1,200/Ounce Is Likely

February 28, 2009 by · Leave a Comment 

Mark O’Byrne submits:

Gold’s correction continues and it has fallen for four days in a row now, but the long term fundamentals remain very sound.

Bargain hunters are likely to reemerge at these levels which should be supportive.

Gold remains up more than 7% so far this year (in dollar terms as per table and much more in euro and sterling) and continues to significantly outperform battered stock markets. With the global economy sinking into a deep recession and possibly even a depression this outperformance looks set to continue in the medium term.

Momentum and technical driven players with speculative short term horizons such as hedge funds are again pressurizing gold however the fundamentals of strong investment demand and anemic supply shall likely see gold well supported between $900/oz and $930/oz. A period of correction and consolidation was clearly needed and this will likely lead to gold targeting the $1,200/oz level in the coming weeks.

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