Jonathan Barratt, CEO & Chief Economist, BarrattsBulletin.com expects the rally seen in global gold prices to continue. He adds that gold is likely to regain its safe-haven status on the top side.
Meanwhile, he expects US debt ceiling concerns to put some pressure on Brent crude prices. He suggests selling crude on any rally.
Below is the edited transcript of Jonathan Barratt’s interview with CNBC-TV18
Q: Do you see further respite coming in on Brent crude on lower levels?
A: It is quite an interesting move because we are seeing quite a lot of declines over the last week or so. We do feel we are getting to a nearer support, but there are supply issues particularly coming out of the States.
I also feel that the market be focusing on the currencies with the government funding and the debt ceiling in the States. That might also have a negative spin on the price of Brent. I feel perhaps there could be a bit more pressure on the downside, but on any correction I will be happy to sell into.
Q: What about gold?
A: At the moment gold is certainly held up over the last couple of nights. Last night’s rally was encouraging and I would look for it to continue to trade higher. It will regain some safe haven status to the top side.
Q: What are the key factors that you think could possibly affect Brent crude on the downside at least in the near term. Is the Iran-US situation something that you would be keenly watching out for?
A: We will be focused on developments there and on the Middle East. Iran or the Iranian people have been suffering for sometime and as a result of the change in the government, I feel they got to come back to power. I think they will come back to the government and the US and will get some resolution on the table. It is just a matter now to find how that resolution will pan out.
Now the market is certainly focused more on what’s happened in States and the economics in the US and to me that is one of the key because we see that the demand coming through and that demand as starts the way the supply starts to pickup, people get nervous and as a result of that commodities come under pressure and that is what we have been seeing. If you have look to the numbers last night out of the States; they do not look like the numbers that will respond into USD 85 billion a month worth of stimulus and that is the question at the moment - is the stimulus working? At the moment I do not think it does.