Tags: Widmer | gold | 1200 | economic

BofA's Widmer: Gold May Drop to $1,200

By    |   Monday, 17 March 2014 06:19 PM

Gold prices have soared 14 percent so far this year, reaching a six-month high Monday, amid concern about the turmoil in Ukraine and China's slowing economy.

April gold futures settled Tuesday at $1,359 an ounce on the Comex. Monday, the price reached $1,392.60, the highest since Sept. 9, before closing down 0.4 percent.

But Michael Widmer, a metals strategist at Bank of America Merrill Lynch, doesn't think the move will continue. "There are a few things in the market that make us believe it is not a sustained rally from here onwards," he told CNBC.

Editor's Note:
Secret Wall Street Calendar Uses Strange ‘Crash Alert System,’ Gets 18.79% Annual Returns

First, there is worry of deflation in the eurozone, Widmer said. Year-on-year inflation for the 18-nation group dipped to 0.7 percent in February from 0.8 percent in January. That will keep the European Central Bank in an easing mode, putting pressure on gold, he explained.

Some weak economic data from the U.S. also have helped drive gold higher this year. But many economists attribute the weakness to wicked winter weather. These "immediate concerns" may ease, pushing gold back down to $1,200, a 13 percent drop from current levels, Widmer predicted.

In addition, Asian investors have been selling gold, he noted.

"I would buy [gold], but it would have to be a very nimble trade," he told CNBC.

Peter Schiff, CEO of Euro Pacific Capital, doesn't share Widmer's bearishness. "I think it's just getting started," he told Yahoo, referring to gold's rally.

It's not the Ukraine situation that's driving gold higher, he said. "The real reason gold is going up is because of inflation." Schiff thinks the Federal Reserve will abandon its tapering of bond purchases.

"The fed has no way out of QE [quantitative easing], the U.S. economy is slipping into back into recession," he noted. "More people are starting to realize that, and accept the fact that the Fed is going to ramp up QE, not continue to taper; all of that is very bullish for gold."

Editor's Note: Secret Wall Street Calendar Uses Strange ‘Crash Alert System,’ Gets 18.79% Annual Returns

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Gold prices have soared 14 percent so far this year, reaching a six-month high Monday, amid concern about the turmoil in Ukraine and China's slowing economy.
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2014-19-17
Monday, 17 March 2014 06:19 PM
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