Yesterday, gold was steady around USD 1,642 an ounce, underpinned by stronger equities.
In an interview to CNBC-TV18, Bill O'Neill, founder of Logic Advisers says, he is bullish on gold in the long-term. "At the end of the year, we will see little interest in the market. I think we should see gold prices somewhere over USD 1,750 per ounce. So, a moderately bullish forecast," he adds.
However, he says, in the near-term, there are so many competing forces.
Below is the edited transcript of his interview on CNBC-TV18. Also watch the accompanying video.
Q: Where gold prices are headed, where are they going?
A: India is very crucial. Some of the recent weakness was clearly related to the new tax put on gold and so on imports and the jewellers’ strike. Now that seems to run its course. It’s a big plus for the market.
Normally, over the years, I have been a consistent gold bull. I usually have a very strong view on gold over the short and immediate-term. I don’t have that right now. I am still bullish long-term. But in the near-term, there are so many competing forces. The toll of the market varies from day to day. For e.g. yesterday was kind of gloom and doom risk off day across the spectrum of investments including gold as well as other metals and industrial commodities and stock markets as well. Today is a much more positive atmosphere and related more than anything else to couple of successful auctions over in Europe the Dutch, Spanish and German auctions.
In the near term, we are going to see a lot of two-way trade in the market. One thing I do find quite encouraging from tactical standpoint is that gold has held key moving average support level. Every time looks like its going to breakthrough bottom, it doesn’t happen, the market goes up. The other side is a lot of resistance around USD 1,675-1,680 per ounce level.
Q: Why is your outlook not so bullish? Gold typically is played safe haven. It looks like the prospects for the second half of growth in US are weakening slightly. We seem to have more and more trouble spots open up in Europe, rising yields in Spain and Italy that story continues. If anything the second half of this year should continue to be turbulent pushing more investors towards gold. So, what prices are you expecting in the second half if you were to put your money on it?
A: I agree. That’s why as I said I am bullish on long-term basis. Gold is very much a psychological commodity. In the near-term, I would say atleast for the next couple of months, we have a less bullish psychology from the speculative community. US data earlier this week running way below for both gold and silver levels that we had, not last month, but last year as well. It doesn’t have the same kind of speculative push.
Gold is sometimes used as a flight to safety and other time it’s been viewed as a risk asset. Right now, it’s kind of somewhere in between. I think that’s why we see the two side of trade.
Q: Where do you expect that price to be at the end of this year?
A: At the end of the year, we will see little interest in the market. I think we should see gold prices somewhere over USD 1,750 per ounce. So, a moderately bullish forecast.