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Yes, Gold Is Under Pressure But Not For Long – ABN Amro


(Kitco News) – Gold prices are struggling due to U.S. yields and have potential to fall further, but a recovery for the metal is coming, says ABN Amro.

“The rally in gold, silver and platinum prices came to a halt on 8 September mainly because U.S. real yields bottomed out, which has provided support to the U.S. dollar,” said Georgette Boele, senior precious-metals analyst for ABN Amro, in a report Thursday.

“In the coming days and weeks, we expect the U.S. dollar to continue to recover, which will probably weigh on gold, silver and platinum prices….Gold prices could decline towards $1,250 per ounce, which will be close to the 200-day moving average.”

At the session low, Comex December gold had fallen $82 an ounce from the Sept. 8 high of $1,362.40. During that time frame, the yield on 10-year U.S. Treasury notes rose from a Sept. 8 low of 2.037% to a high so far Thursday of 2.344%.

The metals have had a rough week, with gold and silver recently hitting six-week lows. December gold futures were last seen at $1,285.50 an ounce, down $2.30 on the day. Meanwhile, December silver was last trading down 4.7 cents an ounce at $16.78.

Although a drop below Boele’s $1,250-an-ounce call would put this year’s gold rally into question, she remains optimistic.

“We expect gold prices to bottom out close to $1,250 per ounce and to move higher again,” she said. “This is because we expect U.S. real yields to edge lower. Moreover, the U.S. dollar recovery is temporary in nature in our view and we expect the U.S. dollar to weaken again at the end of the year and next year.”

ABN Amro is calling for gold to close the year at around $1,300 an ounce and to edge up to $1,450 by the end of 2018.