Credit Suisse Remains Constructive On Gold

Credit Suisse remains constructive on gold even after the steep decline in prices Tuesday. The bank blamed the weakness on U.S. dollar gains, news of an earlier-than-expected planned exit by the U.K. from the European Union, reports that the European Central Bank may taper quantitative easing, and stop-loss selling as gold fell below $1,300 an ounce. “As we noted in our last precious-metals outlook, we continue to view the macro backdrop for gold demand as constructive,” Credit Suisse says. In particular, analysts say they expect gold-investment demand to be supported by negative “real” rates in the U.S. and globally across much of the yield curve. They also look for macroeconomic uncertainty to support physical gold buying, with potential for a set Brexit timeline to spur additional physical buying in Europe during the fourth quarter. Also, Credit Suisse's fixed-income team continues to forecast no Fed rate hikes until May 2017, lower than the probability factored in by the Federal funds futures. Credit Suisse also says valuations are more attractive for gold equities after the decline from the August peak.