Tom Kendall, head of precious metals research at Credit Suisse (CS), explains in this CNBC clip why gold could drop to $1,000 this year despite hitting a three-month high on Tuesday. April gold was last at $1,290.40 an ounce.
According to Kendall´s analysis, if the US economy gets through its recent soft patch, gold could see $1,000 per once this year.
“I think it is realistic to think of gold having a test of the $1,000 level at some point this year,” Kendall said. “I wouldn’t be surprised if we see it trade up a little bit above $1,300 in the next couple of sessions, [ but] “I think the momentum that we are seeing here is probably looking to exhaust itself in the not-too-distant future….Now that’s going to take well into the second half of the year ; perhaps right toward the back end of fourth quarter, before we can start thinking of gold going down to that kind of area. But that is not out of the realm of possibility by any stretch of the imagination – particularly once we get through this soft patch in the US economy and we see real interest rates tick back up.”
Remains to be seen whether Kendall´s prediction will materialize, considering the yellow metal has not touched $1,000 per ounce since the fall of 2009. That said, it’s hard to make a case that we have yet seen the bottom in the price of gold.