Is gold headed for a correction? Top consultancies offer up mixed price outlooks for 2016 – by Peter Koven (Financial Post – April 1, 2016)

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TORONTO — The world’s top two gold consultancies have offered up mixed outlooks for prices in 2016.

Metals Focus and Thomson Reuters GFMS each launched their 2016 gold reports on Thursday. Both firms are cautious on gold in the short term, as they see prices pulling back in the second quarter after rising a whopping 16 per cent in the first quarter. But Metals Focus thinks the second half of 2016 will be very strong, while GFMS is optimistic but more guarded.

Metals Focus predicted gold will peak at US$1,350 an ounce in the fourth quarter, up from US$1,235 currently. The London-based firm said there are clear signs that the consensus on gold has “changed profoundly” as investors now believe the U.S. Federal Reserve will hike interest rates at a far slower pace than previously assumed. The Fed has become increasingly dovish due to economic headwinds.

“Clearly, the Fed talk of four interest rate rises this year has been dialed back quite significantly,” Philip Klapwijk, consultant to Metals Focus, said at a breakfast presentation in Toronto.

Klapwijk also noted investors have been very active gold buyers so far in 2016, with ETF holdings rising by a whopping 300 tonnes. As U.S. inflation ticks up, he said institutional investors have concluded gold “is a good thing to stock up on.”

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