Gold seen jumping to $1,400 at Russian bank amid tension

Bloomberg

Gold prices are set to jump to a four-year high of $1,400 an ounce by the end of the year over mounting tensions between North Korea and the US, and surging demand in the world’s biggest consumers, according to the head of precious metals at a Russian investment bank.
Bullion could rise to $1,360 within three months before climbing higher, fueled by global political risks and buying from China and India, said Evgeny Ananiev at VTB Capital JSC, the investment-banking unit of Russia’s second-largest lender VTB Group.
“We may see some correction, but I don’t think gold will drop below $1,200 as it’s well supported,” he said in a weekend interview in Goa. The metal traded at $1,281.86
on Monday.
Prices have climbed 12 percent this year, driven by worries over a potential nuclear conflict between the US and North Korea, and subdued inflation in the US, which is cooling chances of a further increase in interest rates. President Donald Trump has intensified warnings to North Korea, promising a massive response to any strike against the US or its allies. Hedge fund billionaire Ray Dalio recommends investors place 5 to 10 percent of their assets in gold.
The upbeat sentiment was shared by other participants at the conference. “Fundamentally, we have been very bullish on the market,” said Chirag Sheth, an analyst at Metals Focus Ltd., a London-based independent precious-metals research firm. “What North Korea has done is given gold the legs to go above the $1,300 level and sustain above that level,” he said.
Sheth expects prices to advance to $1,400 in six to nine months as the situation in North Korea sees investors coming back to the market in search of a haven.
Indian demand has also recovered after a poor performance in 2016 and jewellery consumption may climb by about 6 percent this year, said Sheth, who provides supply and demand data to the World Gold Council. Imports may jump about 30 percent to as high as 800 metric tonnes in 2017, he said.