Gold Prices Could Have Best Quarter in 30 Years
Several commodity markets may have experienced sharp turbulence in the first three months of 2016; yet one precious metal seems to have weathered the storm almost effortlessly.
One strategist however believes that there’s still more room to run for the yellow metal.
“There’s still a lot more upside scope to go as the long-term chart shows on gold with an eight-year cycle bottom in place,” Ron William, senior tactical & market timing strategist at The ECU Group, told CNBC Thursday.
“Certainly there’s a big change in investors psychology now in the yellow metal as seen by the performance. And by the models we’re following, it is the best outperformer across multi-assets this year.”
Gold prices have been boosted in recent months thanks to global market sell-offs, geopolitics and concerns over leading economies being potential reasons why prices are heading higher.
On the week, gold is currently up over 1 percent, buoyed by Fed Chair Janet Yellen’s call for caution over U.S. interest rate rises and a weaker U.S. dollar (Exchange:USD=) being some of the more recent drivers.
In the short term however, William told CNBC it was likely gold would see “further unwinding” in the short-term, before prices made their next big move to the upside. While January and February saw a continued sharp rally in the metal, prices in March haven’t shown the same level of gains, as global markets recover from the year’s initial volatility.
“Since January past, gold has been outperforming equities — S&P in particular — which is likely to continue. At the moment, equities are still in their rally phase but as a short-term phase that we are expecting to (see in) early April into the Q2 period,” William added.
“However, we think that will then resume lower for a big potential fall in equities and then gold (will see an) outperformance over the long-term.”
William added that there was a lot more uncertainty for investors to hedge with when it comes to gold, noting how markets have yet to face two significant events: the EU referendum in June and the U.S. presidential race coming to its climax in November.
When giving specifics, William said he expected to see a potential pickup in gold during the summer period, which would continue through towards 2017.
“Looking for a move above $1,288 for the March high, into then $1,488 or $1,500. So there’s still some upside scope to go.”