$1400 an 'obvious target' for gold: SocGen Metals Analyst

Post Brexit chances of a US Fed rate hike is almost impossible now but December hike is still on the cards, says Robin Bhar, Head of Metals Research, Global Markets at Societe Generale.

In interview with CNBC-TV18, he gave his views on the rising gold prices and said that it can go up to USD 1400 per ounce in the medium term and does not rule out the chances of the yellow metal touching USD 1500 per ounce.Below is the verbatim transcript of Robin Bhar's interview with Manisha Gupta on CNBC-TV18. Q: The uncertainties are all there and we have seen the gold prices actually take a lot of lead from that. What is your sense on where are we headed for a slightly medium and longer-term now? A: I think given the heightened uncertainty, political economic uncertainty, of course we have heard from previous commentators, market hate uncertainty but this fuel for something like gold which is safe haven still for value. This should continue to be the case and we think in the medium-term gold can easily trade up towards USD 1,400, possibly even higher depending on how things can develop. What we got to watch for now I think is whether contagion spreads from the UK decision to other members of the EU seeking either a better deal or referendum to have a vote and further departures from the European Union. However, certainly in short to medium-term USD 1,400 would be an obvious target for gold. Q: USD 1,400 is something that we seem to be hearing from a lot of sides but there are levels of USD 1,500, USD 1,600, CLSA has come and talked about USD 4,000 per ounce as well. Do you give it that much of bullishness? A: We don't. We are not I would say so bullish that we would see prices getting anywhere close to the all time peak which is around USD 1920 an ounce that we had a few years ago at the height of the European banking crisis and those other factors in play. We really don't see the factors that at the moment enough to really challenge that all time high. So, if you said to me gold can go trade at USD 1,500, I am going to say, yes, it is possible. We should never rule anything out just as much as a shock to have the vote to come out of the EU.I think there can well be other factors that we can't really predict that could drive down gold and certainly USD 100 above our target so yes USD 1,500 and above, we are not going to rule out. I think you will be foolish to rule out because even the best forecasters didn't see Brexit coming.