Bearish on gold; see support at $1600/ounce: Barratt

Gold has been under pressure for quite some time and Jonathan Barratt of Barrattsbulletin.com thinks investors at the moment are trying to divest from gold and investing in other assets which are offering good returns. However, he feels this move is temporary.

Barratt considers USD 1600 per ounce to be a very good psychological support for the golden metal and USD 1630 per ounce can be the next level. But, looking at the present scenario, buying gold is not a feasible option, he suggested. Here is the edited transcript of the interview on CNBC-TV18. Q: Are we seeing lower lows or lower highs for gold for 2013?
A: I think at the moment, we are seeing a lot of investors fleece in the market and trying to move into other assets. But, I see it as more of a temporary situation. I think the lower run for gold at the moment is very frustrating and also people are divesting from gold into other assets. Q: When you hear names like Soros and PIMCO moving out of gold, it does not exactly look like a short-term, it looks like a buy and hold investors or long-only investors are also rejigging portfolios, is that the sense you are getting?
A: When you look at Soros, when you look at PIMCO, the sense in the market is that they are exiting the market to move assets into other performing classes and that is what we are seeing. The gold market has not performed up to expectations and what you are finding is that people will move some of their assets from gold into US equities which are having a run.
But, I think that it is relatively temporary. I think we will hit that stage where we will find the lows for it, from which people will buy. However, at the moment, there is no real reason to buy gold. Q: Where would you put the low or the downside for gold before it starts bouncing back?
A: I think it is going to be hard to find that. But, what we do know is USD 1600 per ounce is psychologically a very good support. After that USD 1630 per ounce is the next level. If the market does happen to get above those levels, then I think you will still find that it is a very good area to buy.
I think there are a couple of reasons out there that still suggest that dips will be well supported. Q: So far, as you said, gold has not performed as per the expectations of investors and people. Do you expect gold to be a performer in calendar year 2013, what would be the kind of return that you expect from gold this year or is it going to be a sideways flat year for gold?
A: I do not think so. I think that we will start to see more investment in gold once we get to see more clarity on what the global economic picture is looking like and the kind of pick-up that we see. One of the interesting things we have seen, particularly in Europe is that the downturn is going to continue when the head of the IMF at the G20 said there is still a long way to go.
But, I certainly feel that whilst we have the stimulus out there in the market, particularly around the world and obviously in US, whilst the stimulus is there, eventually we will start to take hold and as a result of that we will get cost pressure on the upside and then gold will be back in favour.