 "Jim Rogers")
While analysts and traders from New York to London bet that gold will go higher, veteran investor Jim Rogers would rather seek haven in the dollar as the UK's vote to leave the European Union (EU) roils global markets.
Prices of bullion are due for a drop and will probably be lower at the end of the year versus current levels, Rogers said in a phone interview on Monday, adding that he would buy the metal again once it declines enough. That view is at odds with the median of 12 forecasts in a Bloomberg survey that predicts a gain of more than seven per cent for gold from where it's trading now.
Gold is being boosted by its role as a refuge, with prices on Friday posting the biggest increase of any major global asset as the world grappled with the economic impact of the UK's exit from the EU. The rally added to what_s already been a stellar 2016 for bullion, with prices up 25 per cent after three years of losses. Hedge funds have boosted their bets on gains in the metal to an all-time high. This enthusiasm is what is making Rogers wary.
"Gold has been staggering this year, went straight up, and I don't like to buy anything that's run straight up," Rogers said. "I would prefer to buy the dollar as a haven than gold.
Bullion for immediate delivery rose 0.8 per cent to $1,325.82 an ounce at 11:01 am GMT in London, according to Bloomberg generic pricing. The metal advanced to $1,358.54 on Friday, the highest level since March 2014, and the 8.1 per cent gain was the biggest jump since September 2008. Prices could reach as high as $1,424 by the end of the year, according to the Bloomberg survey.
Speculation that the Federal Reserve will keep US interest rates low has boosted demand for the metal as a store of value, while a volatile geopolitical backdrop has increased haven buying. Before the UK's vote on Thursday, central bankers had been sounding the alarm that an exit from the EU could be disruptive to the global economy. Federal Reserve Chair Janet Yellen cited Brexit "consequences" as among the factors that went into the decision to keep interest rates unchanged at a policy meeting this month.
Uncertainty surrounding the global implications of Brexit and the flight-to-safety sentiment are likely to be more persistent, said Goldman Sachs Group Inc, upgrading its outlook on gold over the year. The bank increased its three, six and 12-month forecasts to $1,300, $1,280, and $1,250 an ounce from $1,200, $1,180 and $1,150, respectively, analysts including Jeffrey Currie and Max Layton wrote in a report received Monday.
