Market update courtesy of Universal Coin & Bullion – By Mike Fuljenz.
With the euro falling in value and negative interest rates dominating the European banking system, gold demand is rising in Europe. The German bank, Commerzbank, has been one of the most consistently accurate big banks about projecting the positive advance of the price of gold this year.
While nearly every other major bank saw lower prices in 2016, now we learn that Commerzbank sees gold rising over 13% to reach $1,450 by the end of next year. (The bank’s target is $1,350 for the first half of 2017.)
In the short term, they say, “If a Federal Reserve rate hike in December appears more probable after the U.S. elections, prices are likely to further decrease slightly. But we do not expect any more pronounced price slide because the selling pressure from speculators is likely to abate and physical buying interest will doubtless pick up at lower prices. We still envisage rising precious metal prices in 2017.”
The report said that most of October’s “short-lived autumn depression” for gold was mainly technical in nature resulting from sell-stops being triggered when the price fell below the important support level of $1,300. Despite the Fed’s likelihood of raising rates, Commerzbank says most other key central banks are pursuing looser policies, including negative interest rates and quantitative easing.
In addition to the U.S. election, there are also numerous uncertainties associated with several important elections in Europe. Commerzbank also said Chinese gold demand will grow from 986 tons this year to 1,200 tons by 2020.