Credit Suisse: Gold May Retest Record High of $1,921

GoldCore Note

Gold prices are marginally higher today and look set to have their best monthly gain since June 2016.

Spot gold was up 0.2% at $1,413.60 per ounce in late morning trading in Europe. Gold has risen over 8% this month so far. A monthly close above $1,400/oz will be positive from a technical trading perspective.

Gold prices have surged to the highest since 2013 as the U.S. and global economy slows and due to the likelihood of a return to ultra loose monetary policies. Rising geopolitical tensions  in the Middle East and between an aligned Iran, Russia and China versus the U.S. is also leading to safe haven demand. U.S.-Iran relations have deteriorated sharply whereby war has become a very real possibly alas.

Trade,  economic and geopolitical uncertainty have seen safe haven demand return and pushed prices higher. There are real concerns ahead of the very important trade talks between China and the United States this weekend.   

The meeting between Trump and Xi Jinping may determine the next phase in this dispute and whether the U.S.-China trade war deescalates or escalates.

Gold traders will be reluctant to go short today due to the scale of risks ahead of the likely Trump and Xi talks. Indeed some may move to cover their short positions as if there is no progress in ending the year-long trade dispute or indeed tensions escalate, gold will likely go higher.

Gold’s mood music has changed radically in the last month and banks, hedge funds and other institutions internationally have become much more bullish on gold. They are revising upwards their price forecasts for gold in 2019 and the coming years.

Credit Suisse and Morgan Stanley are two such institution and they see gold having strong gains in the second half of 2019.

Credit Suisse analysts, like us, see gold returning to it’s record nominal high of $1,921/oz.

“Bigger picture though, given the magnitude of the base, which has taken six years to form, we suspect we could even see a retest of the $1,921 record high,” according to David Sneddon, global head of technical analysis at Credit Suisse.

Gold has established a multiyear base that could provide the platform for a “significant and long-lasting rally” for gold, he said. We concur with this view and indeed are more bullish as we see gold going to well over $3,000/oz in the long term.

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LBMA Gold Prices (AM/ PM Fix – USD, GBP & EUR)

27-Jun-19 1402.25 1402.50, 1103.71 1105.87 & 1233.14 1234.76
26-Jun-19 1406.75 1403.95, 1109.22 1106.73 & 1238.501236.32
25-Jun-19 1429.55 1431.40, 1120.62 1124.36 & 1255.72 1256.20
24-Jun-19 1405.45 1405.70, 1102.58 1105.30 & 1233.56 1235.05
21-Jun-19 1388.35 1397.15, 1095.96 1101.93 & 1228.55 1233.12
20-Jun-19 1381.65 1379.50, 1086.25 1087.74 & 1222.90 1221.27
19-Jun-19 1342.40 1344.05, 1066.67 1066.64 & 1198.36 1199.43
18-Jun-19 1344.55 1341.35, 1073.22 1070.67 & 1201.89 1198.09

Mark O'Byrne

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