Be ready for gold’s ‘bullish wave’ – analyst
Struggling gold prices will soon see better days, with a bullish wave projected to bring about as high a level as $1,370 this year, according to one analyst.
“At the present juncture, sentiment in the gold market looks excessively bearish, which is unsustainable,” Metal Bulletin precious metals analyst Boris Mikanikrezai wrote in a Seeking Alpha post on Friday.
Spot gold prices tumbled almost 9% in the last six months. And on Friday, the prices nearly hit the $1,200 level. The December Comex gold futures also had a tough few months, last seen trading at $1,222.90, down 0.02% on the day, after hitting a 12-month low on Friday.
Despite this major drop, the yellow metal has been one of the most resilient trading options within the precious metals space, Mikanikrezai noted.
“In the second half of the year, I expect a strong rally in gold prices and gold-mining equities as the macro backdrop for the precious metals complex should prove more positive,” the analyst wrote.
The evidence behind the expected turnaround in gold is in the excessively stretched gold’s spec positioning on the short side, according to the note.
“[This] suggests that a reversal may be imminent. In my view, bears are playing with fire at this juncture, and some of them are on the verge to get burnt,” Mikanikrezai said.
Fund managers increased their net bearish positioning in gold futures, according to the most recent weekly data from the Commodity Futures Trading Commission.
The CFTC’s “disaggregated” report showed that managed-money accounts upped their net-short position in gold futures to 36,422 contracts from 26,449 the week before. Total shorts rose by 12,447 lots and outpaced the fresh buying, with the latter reflected by an increase of 2,474 gross longs.
These numbers point to a reversal, which could lead to a surge is spot gold prices, added Mikanikrezai.