Jonathan Barratt of barrattbulletin.com sees precious metal gold rallying to USD 1400 an ounce. Speaking to CNBC-TV18 on his expectation from the commodities space, she said more stimulus by the US Fed and less tapering is the key to the rally.
Meanwhile, he remains bearish on Brent crude and expects it to correct to USD 100 per barrel.
Below is the edited transcript of Barratt’s interview to CNBC-TV18.
Q: Gold now seems to be on an upward trend. What is your target price on gold and how do you expect it to move possibly up till December?
A: Gold certainly has had a nice bounce. I like the fact that it has bounced quite nicely and more importantly held onto those highs. If we can stay above USD 1,350 I would be looking for USD 1,375 as the next target and maybe even up to USD 1,400. The key in my mind is obviously more stimulus, less tapering and the fact that we might also get some fiscal stimulus out of the US which will certainly support it. In my mind it is looking quite strong and I would expect higher prices to prevail.
Q: What about crude? You have been a bit bearish on it and prices have been hovering lower. Do you expect this weakness to continue?
A: This is quite interesting. There are a couple of developments which should happen. Crude has been under pressure for sometime and we have seen about a 10 percent correction. So, I would think that we are due for a bounce soon.
This is a period where we do get seasonal builds, inventories increase and I also feel that the spread between West Texas Intermediate (WTI) and Brent has widened to a level which suggests it should come in a little bit. So, I do overall have a bearish outlook for crude, but we have taken our shorts off the market and we are neutral because we feel that we are ready for a bounce over the next couple of days. US durable goods orders on Friday night were quite supportive, so I think the market is short and we are due for a corrective rally. But I would look to re-establish shorts once I see that rally expire.
Q: What is your medium-term to long-term target on Brent crude in particular?
A: I actually think we have seen a good correction. I would actually like to see Brent around that USD 100/barrel. I would like to see it quite significantly lower by about USD 7-8 and I would look for that to occur around Q1 next year. At the moment, we are continuingly seeing soft demand on inventory builds and if we get a winter in the northern hemisphere that is relatively mild, then I think it is justified to see those prices lower. So, I am still a bear, but I am just looking for a better place to sell.