Taurus sees gold at US$1,400

[SINGAPORE] Gold's blistering start to 2016 may be just the beginning, according to Taurus Wealth Advisors Pte, which says bullion may prove to be this year's best performing asset as central banks exhaust their firepower.

There's a high probability the metal may surge to US$1,350- to-US$1,400 an ounce by the year-end, said Rainer Michael Preiss, a strategist at Singapore-based Taurus, a multi-family office with US$1.4 billion under management. A rally to US$1,400 needs a 13 per cent gain from Monday, or 32 per cent over the year.

Bullion has soared in 2016 as speculation that global growth is faltering prompted traders to cut bets on higher US borrowing costs. The spread of negative interest rates in Japan and Europe has also added to gold's appeal, with investors boosting holdings. Evolution Mining Ltd, Australia's second- biggest producer, said last month a loss of faith among investors in central bankers' ability to deal with challenges was spurring gains.

"Gold is the ultimate beneficiary when central banks run out of ammunition and more stimulus and negative interest increasingly become counterproductive," Mr Preiss said in an e-mail in response to questions. It's "already outperforming global equities as well as most corporate bonds."

Bullion has topped the Bloomberg Commodity Index in 2016, rising 17 per cent to US$1,238.73 an ounce on Tuesday. That compares with the 6.7 per cent loss in global stocks, 1.3 per cent decline in Brent crude and the dollar's 0.2 per cent dip. Last month, gold posted the biggest monthly rise in four years while assets in exchange-traded funds surged 12 per cent, the most since 2009.

Not everyone is bullish. Goldman Sachs Group Inc has said the concerns that spurred gold's gains this year aren't warranted, and prices will slump back to US$1,000 in 12 months as US interest rates rise. Bullion may end the year at between US$1,000 and US$1,150, Oversea-Chinese Banking Corp's economist Barnabas Gan said last month.

"Our bearish view for gold is very much underpinned by the Fed rate hike in 2016," Mr Gan said on Tuesday in an interview on Bloomberg Television, reiterating his outlook. "We're still calling for a Fed rate hike at least once this year, one-to-two more beyond that if the growth production and the recovery story is still on track," he said. OCBC was ranked by Bloomberg as the top precious metals forecaster for the final quarter of last year.

BLOOMBERG