Global gold prices have undergone a downward correction due to sluggish demand, but prices are likely to rally in the middle of next year, a Bank of Taiwan (BOT, 臺灣銀行)) official said yesterday.
Terry Yang (楊天立), deputy general manager of the bank’s precious metals department, made the comment at the launch of the bank’s commemorative gold and silver products to mark the Year of the Pig next year.
Gold prices dropped below US$1,200 per ounce on Friday, marking the sixth straight month of decline, Yang said, describing the fall as the longest in history.
Gold prices declined mainly due to a strong US dollar, which made the US dollar-denominated metal more expensive for holders of other currencies, in addition to surging US bond yields and a robust US stock market drawing investors away from gold, Yang said.
Gold prices have not yet bottomed out, he said, adding that they could drop further to test the US$1,160 mark.
Prices are likely to hover between US$1,160 and US$1,235 until the end of this year, he said.
Yang said he expects the US Federal Reserve to raise interest rates three times next year, which could lead to a downturn in US stocks and prompt gold prices to climb.
Gold prices would not rise until the middle of next year, as it usually takes at least six months to see how the interest rate increases play out, he said.
As the local stock market has hit a bump because of the US-China trade tensions, investors could consider hedging on gold, as many middle-class investors in emerging markets have been doing, Yang said.
As for foreign media reports about palladium prices surging 30 percent to US$1,072.8 per ounce at the end of last month and that they might surpass gold prices, Yang said that demand for palladium increased because it used to be cheaper than platinum, but that the price hike was a result of manipulation and prices could retreat.
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