(Kitco News) - Time to reel in the fish, gold bulls. One known forecaster says gold’s run-up is about to turn sour.
“Gold is a clear winner in the current equity rout…and still a safe-haven nonetheless,” said Barnabas Gan, commodity economist for Oversea-Chinese Banking Corp. Ltd. (OCBC), in a commodities report Thursday.
However, given several factors, including continued tightening by the U.S. Federal Reserve, he said he will be sticking to his price forecast of $950 an ounce by year end.
Commenting on Wednesday’s Fed statement, Gan said the central bank expects inflation to rise in the medium term and for economic conditions to improve. “On the same note, our outlook for three rate hikes in 2016 should result in a dearer greenback,” he said. 
“Given that gold is widely regarded as a safe haven and a dollar hedge, its future price trend should anchor on these two factors,” he added.
Gold futures have had an exciting start to the year after jumping back above $1,100 and near a three-month high on the back of weaker equity and oil prices. April Comex gold futures were last quoted down 0.18% at $1,114.80 an ounce.
Gan also commented on the oil rout, which he expects to continue in the first half of the year. He added that crude oil prices, when adjusted for inflation, are currently at 2001 lows.
“Prices may remain weak (sub-$40/bbl) in 1H16,” he said. “Suspense over future production and inventory levels will likely cap any rally.”
After hitting a near 13-year low, oil prices have slightly recovered. West Texas Intermediate crude oilwas last quoted up $1.49 at $33.79 a barrel.
Over the long run, however, Gan sees prices recovering as supply, particularly in the U.S., will decline. “We look for U.S. crude oil production to fall to 8.8 mbpd at end 2016,” he said.
According to the report, oil prices are expected to rise to $50 a barrel by year-end. Gan was named Bloomberg’s most-accurate forecaster for precious metals in the second quarter of 2015.
By Sarah Benali of Kitco News; sbenali@kitco.com
Follow me on Twitter @SdBenali
