Gold market is gaining some momentum as prices approach $1,800, while a Canadian bank sees more upside potential as there could be upside play in the precious metal. In a research note released Monday, BMO Nesbit Burns metals and mining analyst Jackie Przybylowski says recent client meetings have focused little on gold and more attention to base metals.
Jackie Przybylowski: Global concerns may boost investor interest in gold stocks
Cryptocoin. com, the gold market is grappling with a lack of investor interest that has put pressure on fiyadollarsar and pushed it below $1,800. But Jackie Przybylowski says this is still a positive environment for the precious metal:
Does the lack of interest in precious metals present an upside buying opportunity? Maybe. In the near term, we expect significant volatility in commodity markets, geopolitical actions and macro outlook; overall, it promotes gold as a potential countercyclical investment.
BMO sees short-term potential in precious metals, but they are still relatively neutral for the rest of the year. The bank estimates that the gold price will be around $1,800 in the fourth quarter. Looking at 2022, the Bank thinks that the annual average price will be around $ 1,669. Analyst Jackie Przybylowski says that while gold prices are struggling in the near term, the mining industry represents value:
Current market volatility, potential weakness in China, possible heightened geopolitical instability, particularly in Peru and Chile, and continued delays in global reopening as the world grapples with COVID variants may increase investor interest in gold stocks. The current low interest level in the industry can provide an attractive entry point in our opinion.
“Our valuation model shows that gold is still significantly undervalued”
Gold remains sensitive to the Fed’s tapering signs. Cooling inflation and softer labor data raise the risk of delay in tapering. However, expectations for the Fed to begin tapering later this year will weigh on gold, according to the ANZ Bank sdollarser:
Strong data until September will be important for the Fed to announce tapering from November. The slowdown in asset purchases and the expectation of interest rate hikes this year may be supportive for the US dollar and counterproductive for gold prices. On the other hand, disappointment in employment data or lower inflation could provide upside space for the yellow metal.
ANZ Bank sdollarseries states that gold prices diverged with US 10-year yield and tips, but this trend did not last longer.
Our gold valuation model shows it is still significantly undervalued. Expensive stock valuations and other uncertainties increase the likelihood of a market correction as the S&P and gold ratio hits 2008 highs. This may encourage investors to hold safe-haven assets.