Gold Could Hit $1,600 as Bearish Factors Have Shifted - ETF Securities

KITCO NEWS -- Gold prices saw a boost late last week following the September Federal Open Market Committee meeting, which saw the central bank leave U.S. interest rates unchanged. Despite the metal’s corrective pullback Monday, one research director says gold may be setting itself up for further gains post the Fed decision. December gold futures were last quoted down 0.5% at $1,132.10 an ounce. In an interview with Kitco News, Mike McGlone of ETF Securities said many bearish factors that have been weighing on the yellow metal may now have disappeared. 'Many of the bearish drivers for gold appear to have shifted or reached extremes including: the record setting stock market rally, overly optimistic Fed tightening expectations, the strong US dollar and the substantial decline in crude oil prices,' he said Monday afternoon. McGlone added that he is not surprised the Fed did not raise rates since the economy is not ready to withstand tightening. 'The primary reason for the Fed to raise rates is to suppress inflation and inflation expectations but the greater risks remain towards disinflation or deflation. Declining commodities, declining stock prices and the strong US dollar are deflationary forces,' he continued. According to the research director, it may also be good for gold investors to look closely at the U.S. stock markets' next moves because, based on historical data, the metal may be poised for some gains. 'When gold peaked in 2011, it was near $1,900/oz. while at the same time the S&P 500 bottomed near 1,200. Now in 2015, gold is near $1,200 and the S&P 500 is near 1,900. The levels basically transposed since 2011. The risk is that these markets continue to revert- potentially back to near 1,600,' he noted.

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