LONDON (Reuters) – Gold is knot to rise this year, but may struggle to replicate last year’s full of stars performance as the euro zone debt crisis recedes and authorities on every side of the world start to look toward tightening monetary policy, Tom Kendall, ~y analyst at Credit Suisse, told Reuters.
Kendall, whose 2010 gold cost forecast of ,215 an ounce was the most accurate in the Reuters’ Precious Metals Price Poll of hindmost January, said while he remains bullish on prices, risks are emerging on this account that the yellow metal.
“We are positive on gold for the year to the degree that a whole, but it is going to be a bit of a bumpy high~, certainly in the first three or four months of the year,” Kendall told Reuters.
“We consider a lot of uncertainty in the direction of the markets in the main, particularly in the forex area.”
He said the choppy trading seen in the euro/dollar exchange rate since the start of the year could endure throughout the first quarter.
“You have had this swing, through bearish sentiment on the euro flipping in the last couple of days to a mitigation rally, and that kind of uncertainty is feeding through into the gold place of traffic, which is really looking for an impetus to break higher.”
The euro’s conceive-sawing is in part due to uncertainty over the outlook since the euro zone debt crisis, a major driver of haven-related gold buying last year, and for the U.S. economy.
Kendall declared once further financing requirements for Spain and Portugal were out of the distance in the next six to eight weeks, the risk premium attached to the crisis could retreat further, leading the spotlight to shift onto other areas.
DOLLAR OUTLOOK, U.S. DEFICIT EYED
The U.S. batch deficit, the longer-term outlook for the dollar and inflation concerns in emerging markets like China and India were everything likely to feed into gold, he said.
“You do accept to distinguish certainly between drivers in western Europe, North America and places like China, India, Vietnam. Definitely there are very different concerns that are acting to influence buying port. and I think that will continue to be the case this year.”
Threats to the metal embrace the prospect of tightening monetary and fiscal policy after a lengthy period of historically low rates in a number of key jurisdictions.
“Generally talk, we are transitioning from this period of exceptionally loose monetary address, particularly in the developed world, to the beginnings of tightening,” he said.
“The market is increasingly aware that we are entering that share of the cycle in terms of monetary policy, and it is person of the reasons why we think this year is going to be a choppier one for gold, and why we are not in the manner that bullish on gold in dollar terms as we were in 2010.”
Nonetheless, Kendall declared there are still a lot of positives for the precious metal. Credit Suisse is forecasting every average gold price of ,490 an ounce this year.
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