See gold in $2300-2500/oz range in 2013: Fat Prophets

Although gold has gained only 4.56 percent in 2012, Fat Prophets has been its strong supporter for sometime. In an interview to CNBC-TV18, David Lennox of Fat Prophets says he is very bullish on gold. "We think gold will trade somewhere between USD 2,300-2,500 an ounce through 2013," he adds.

A lot of run up is seen in metal prices. Lennox is also bullish on base metal prices. "When we have a look at the broader global economy, we do think that China now is certainly looking as its economy is going to base out through 2012-end and early into 2013 then probably start to grow at a higher rate than the previous years. We think that certainly lays a very good platform for base metals going into 2013," he explains. Also read: Momentum in gold to remain weak, says Phillip Capital Below is the edited transcript of his interview with CNBC-TV18's Latha Venkatesh and Ekta Batra. Q: Do you think the combination of better housing numbers from US, some recovery expected in Japan because of the new government and perhaps more loose policy, maybe even China turning around is going to set-up metal space for more gains? A: When we look into 2013, we are becoming a little more bullish on base metal prices. For example, we expect copper price to trade somewhere in the range USD 3.90-4.10 per pound. When we have a look at the broader global economy, we do think that China now is certainly looking as its economy is going to base out through 2012-end and early into 2013 then probably start to grow at a higher rate than the previous years. We think that certainly lays a very good platform for base metals going into 2013.


Q: What kind of visibility do you have for the first or the second quarter? A: At this stage, we would be expecting a lot of the gains to be probably had later in 2013. As we roll through into the New Year, we think there is still a lot of, baggage hanging on from 2012. There is still that uncertainty that China will infact continue to grow. There are still calls that its economy will continue to shrink. We, however, have an opposite opinion. So, until we get a clear picture of that happening, markets will be a little bit hesitant to rush into commodities. About the US and its fiscal cliff, we do know that no matter what happens, if that is negotiated down, the US government sector will be a drag on the US economy going through into 2013. Whether it is a significant one or less significant one depends on the outcomes of the fiscal cliff negotiations. Also, that will place some uncertainty on what investors are looking for in 2013 and again we will have to wait and just really see how much of a drag the US government sector will be on the US economy. That is going to take atleast 12 months to play out. So, we think that the gains will be made late in 2013.  Q: What is your view with regards to gold? Gold seems to be hovering around that resistance level of USD 1700. What do you expect it to range in? What would possibly be the next trigger for gold? Do you see more upside or downside with the triggers outlined? A: We have been a strong gold supporter for sometime. Our range for 2013 will again emphasise our bullish outlook. We think gold will trade somewhere between USD 2300-2500 an ounce through 2013. The reason has to do with the US dollar. The fiscal cliff is a drag on the US economy. Also, we think a switch from investors looking into the US and perhaps wanting to reinvest back into the euro would place a lot of pressure on the US dollar. We think that, that will be one of the very good drivers of gold prices in 2013. Q: Your view on Brent crude? A: Brent will probably trade somewhere in the range of about USD 92-117 for 2013. We do think that there is now the building of confidence in the US. Fall in unemployment that we had been looking for, will drive US crude demand higher. We are aware that there will be supply coming on, out of that country, but we do think that, that supply will probably only be able to make up a portion of what they require. So, we are quite confident that in 2013, we will see the Brent price trade higher.