George Cheveley, Investec Asset Management Portfolio Manager, disclosed his perspective on gold’s future in 2017 alongside oil and industrial metals.
Cheveley opened up his forecast on Bloomberg Daybreak:Asia with Yvonne Man. According to the Portfolio Manager, gold futures are down due to the people’s shift of attention to President-elect Donald Trump’s campaign. Moreover, the Republican policies on growth revitalization and speculations on Federal Reserve interest rate hikes next year contribute as well.
As a result, the focus of the traders and market participants was allotted to the United States and its upcoming President. It is anticipated gold will be volatile following the election.
Nonetheless, December may see gold climbs and people giving interest to the rest of the world once again. It should be noted that there are uncertainties to follow, which are partially due to Trump’s election.
Cheveley stated that this is similar to 2015’s happenings, wherein gold traded softly and slight rise occurred in December. By January 2016, the gold took off. Potentially, this would be the similar pattern this year until 2017.
Once people are through with their utmost attention on America, other global nations will be magnified. Incertitude will be present in Europe, especially now that recent issues may influence its markets. These events include Italian referendum and upcoming elections in Holland and Germany. These occurrences could divert people’s attention from America to the rest of the world.
The oil industry is being seen moving into deficit. Nonetheless, next year, re-balancing of the segment may happen. This is in line with OPEC meeting on November 30 with its purpose of cutting oil oversupply. Bloomberg’s Man stated that Iraq and Russia are somehow warming up on coordination with the 14-cartel organization. Cheveley stated that in order to avoid deficits in the following years, oil has to increase in value no matter what OPEC achieves by November-end.
OPEC may be claiming to reinforce narrowing oil glut in the best way possible, but Cheveley sees that irrespective of this, markets will fall into scarcity and oil prices will rise next year.
Cheveley was asked whether the $60 per barrel could happen or not. According to him, this may be presumed and it has to happen in order to keep the market going. Still, oil production still has to be increased by five percent annually just to sustain balance.
As per industrial metals demand, Cheveley stated that China would likely get more attention than Trump affecting the segment for the country has the largest demand. There may be small Trump effect, but China’s resurgence will majorly influence the industrial metals market, particularly copper.