Gold to hit $3,500 within "a couple" of years: Citi analyst Thursday, August 29, 2013 by Fiona MacDonald
Gold’s revival, traceable to ongoing turmoil in Syria as well as market queasiness over the U.S. debt ceiling, sent investors scurrying to the cover of the traditional safe haven metal, a rush that culminated in the metal entering a bull market Tuesday.
The following day, in news that rivals Miley Cyrus’ twerking at the VMAs for notability, came talk of bullion headed for $3,500 per ounce, an eventuality that would require the commodity to surge by 150 per cent.
Citi analyst Tom Fitzpatrick, in an interview with King World News, said he expected to see gold’s revival pick up pace in the days to come.
Ever the gold bull, Fitzpatrick dismissed the metal’s fall from a height of the last year as “a correction”, opining that it approximated events from decades ago that, in turn, presaged great things.
“Within the gold dynamic, we believe this recent correction was very similar to what the gold market witnessed from 1974 to 1976 -- as the equity markets recovered from the bear market bottom in 1974. In this instance, very recently gold went 14% below the 55-month moving average, exactly as it did back in 1976.
“After the low in gold in 1976, the equity market peaked 4 weeks later. So far, following the $1,181 low in gold, the peak in the equity markets has been 5 weeks thereafter. And as we started that historic upward movement in gold, beginning in 1976, this was also when the equity market peaked and went into a corrective phase, and that is when gold really came into its own.”
He went on to say that he expected this trend to accelerate to the point where bullion would go as high as $3,500 “in the next couple of years.”
In line with that projection, Fitzpatrick said he expected silver to crest above $100.
Notably, other Citi analysts have been more cautious, with metals specialist David Wilson opting for a target of $1,150 per ounce for the end of this calendar year, with 2014’s year-end target set at $1,145 per ounce and the figure for 2015 coming to $1,250.
Gold’s renaissance has come after months in which the market seemed resigned to seeing the yellow metal plummet, a path it has followed with the exception of minor upticks since the massive drop in price that characterized April, in which the precious metal lost more than $200 over the course of two day’s trading.
Gold for December delivery, the most-traded contract, is trading at $1,409.10 per ounce on a day on which it rose as high as $1,434 per ounce in intraday trading.
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