Davis Hall, global head of foreign exchange and precious metals advisory at Credit Agricole Private Banking, finds it hard to be bullish on gold.
The rising US stock market and an impending interest rate hike seem more important than the safehaven appeal of the yellow metal. Adverse news such as the default in Argentina, conflict in the Middle East and the risk of war in Ukraine have not pushed up the price of gold.
“You really need to have much greater volatility and a real serious dent in risk appetite for gold to start playing. Gold has to fight the inevitable normalisation of the US monetary policy. It is hard to be really bullish on gold. We could be in the range of $1240-$1350 an ounce,” Hall said.
As the US starts raising rates, gold might test lower levels initially and demand could rise on weakness.
“Gold prices will be supported on weakness. But, I don’t expect frenzy. I don’t think we are breaking $1180 an ounce and I like buying between $1240-$1300.”
At lower levels, gold might see demand coming from countries like India and China, which together account for a major chunk of the physical demand for gold.
Gold prices might get some support with the onset of the Indian Hindu festival Diwali in October and marriage season, coupled with the government’s intention to relax import duties, Hall added.
In a bid to curb the current account deficit and support the weak rupee, India increased the gold import duty three times last year to 10%.
