With gold prices hitting a new all time high above $1600/oz on the back of 12 days of rises, Business RT spoke with Ole Slot Hansen, Trading Advisory, Saxo Bank, about the outlook, drivers, and factors at play.
RT: How much higher is gold likely to go?OH: “If it should follow the annual average for the last 10 years it can go to 1,740. If we look at the inflation adjusted price it needs to reach 2,400 before breaking the high from January 1980.As long the debt crisis remains unresolved investors will continue to look at gold and silver as attractive alternatives. I currently do not see it go much higher than 1,670 and would short term expect some consolidation as we have seen previously once a new high has been made.”
RT: What are the key factors driving gold?OH: “Sovereign debt crisis on both sides of the Atlantic combined with the “follow your neighbor” attitude by investors. The last couple of months have been very difficult for many investors, large and small, and once something moves we tend to see many getting involved at the same time. Silver move to 50 dollars back in February and March described this very well and also highlighted the risk once something becomes to one sided.”RT: Are these factors likely to remain in play for the longer term?OH: “At least for the foreseeable future. The U.S. government needs to find a solution on how to raise the debt ceiling before August 1 while the European debt crisis has now lasted for more than one year, still without a clear political solution being found.”RT: What alternatives to gold are there for those concerned about global volatility?OH: “Commodities with limited supply, such all precious metals, tends to perform well during such times. Look for a diversified investment across different commodities as volatility on individual commodities can be very high, just like we saw during the June sell off.”