See further run for gold, may touch $1500/oz: Macquarie Sec

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Richard Gibbs, Global Head at Macquarie Securities still sees money on the sidelines globally. "Select fund managers are still waiting to be fully invested." He feels US domestic demand and the Chinese economy are keys for markets.

The dollar can fall another 5-7%, according to him. The thanksgiving trading period will set scene for 2010, he says. "Strong thanksgiving period sales can lead dollar recovery."

Commenting on his top picks, Gibbs says he will remain fully invested in equities and is not looking at defensives currently. He still sees potential in the energy sector and says he will focus on mid-cycle cyclicals.

He feels the emerging markets can rally another 7-10% but will see disproportionate price movements. Gibbs sees a further run for gold. "The metal may touch USD 1,500 per ounce."

Here is a verbatim transcript of the exclusive interview with Richard Gibbs on CNBC-TV18. Also watch the accompanying video.

Q: The question now is how markets can close up the year and whether there is going to be a big bang of momentum or just sideways market for a while - what do you reckon?

A: There are a couple of important factors that have started to unfold this week. The first of course is US Thanksgiving period and what the state of domestic demand is in the US economy as we move to the outturn of the year or finish line. The second one of course is the momentum in the Chinese economy and the refining of fourth quarter 2009 growth numbers, which we will have out by mid part of December. Those two events are going to be important in relation to whether we do see a last minute surge in momentum. Also, superimposed on top of that is the Copenhagen Climate Summit and whether or not we any consensus emerge in relation to emission controls and reductions and climate change policy generally.

Q: How is liquidity positioned right now? Is there still a bit to come in by the time we finish up the year?

A: From my readings globally in the last month or so and I've been to most major jurisdictions, there is still money on the sidelines. There are proportions of managers who still regard themselves as reluctant bulls - who missed the early stages of the turn in the market globally from March this year. They are still waiting to fully invest. So they are still testing the winds and they are likely to come in and add to any momentum as we move into that finish line for 2009.

Q: A lot of the emerging market equity trades have been correlated inversely with the dollar. How do you read the Dollar Index and how much do you think it will rub off on emerging market performance from here?

A: We could see another 5-7% depreciation in the US dollar. A lot would depend on what we would see unfolding in the terms of the state of domestic demand in the US. That's why I say this Thanksgiving trading period for retailers is very important for us. It really sets the scene for the remainder of the year and the outturn into 2010. If that proves to be more resilient and robust than currently anticipated on the spending side, then I suspect we will see some recovery in the US dollar as we move to the finish line.

If it disappoints, then I suspect it will be a catalyst for some for further weakness. Set against that of course you have people still trying to preserve capital in relation to currency exposure to the US dollar. Their propensity is to continue to play significantly in the precious metals area and particularly on the gold side.

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