By Paul Ploumis (ScrapMonster Author)

February 18, 2016 01:34:14 AM

(Kitco News) - TD Securities sees potential for gold to climb to $1,300 an ounce. Gold rose to a one-year high last week due to expectations for accommodative monetary policy and conjecture about negative rates in the U.S.

“All this meant that global real interest rates could go still lower, which reduces the gold cost of carry,” TDS says.

“This usually tends to gets investors positioned into gold over the longer term. As such, we do believe the central-bank dynamics will eventually help gold move near $1,300/oz, once the short-term USD-related negatives fade further.”

Markets do not expect another Fed rate hike for “another 20 months or so,” while U.S. economic data are likely to continue to disappoint, TDS says.

“We continue to argue that gold is likely to consolidate at around $1,200/oz then move back up toward $1,250/oz, before it attempts $1,300/oz,” TDS says.

“As such, we have extended our bullish gold trade by revising our stop higher to $1,180/oz and by setting a new medium-term target of $1,300/oz.”

However, TDS also cautions that gold may ease back toward $1,185 by year-end as the U.S. and global economies stabilize and markets put Fed rate hikes on the table again.

Courtesy: Kitco News