Take heart, gold bugs. Here’s why you can be bullish about the metal – by John Shmuel (National Post – November 25, 2015)

The National Post is Canada’s second largest national paper.

Despite years of selloffs that have left gold prices at levels not seen since 2009, some think there’s reason to be bullish.

Gold prices dipped slightly Wednesday as investors drove up the U.S. dollar and market fears over the conflict between Turkey and Russia appeared to subside. Gold prices for the December delivery contract on the New York Mercantile Exchange fell 0.5 per cent to US$1,068.40 an ounce.

But HSBC Securities sees upside from current level, saying the precious metal will see an average price of US$1,205 next year — up roughly 11 per cent from current levels.

“We remain mildly bullish on gold prices, but the bounce has taken longer than we had anticipated,” said James Steel, chief precious metals analyst at HSBC Securities. “Gold prices recently again fell to five-year lows, largely on the back of renewed USD strength. We believe that 2016 could see a more decisive recovery.”

HSBC made the call even as the market now expects the U.S. Federal Reserve to raise its benchmark interest rate next month, something seen as generally negative for gold.

Gold prices tend to move inversely to the U.S. dollar, and a rate hike would be seen as a vote of confidence in the strength of the economy — something expected to drive up the greenback and hurt gold.

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