Gold may reach $2350-2400 very quickly: McGuire

Peter McGuire, CEO, XM Australia, says coming to crude, “it had a tremendous run up and also when you are thinking about where WTI is $85 plus, 85 and a quarter, and you have got Brent sitting at $89.10, I feel as though that $90 will be taken pretty quickly and I would not be surprised.”

If one is looking to buy any gold jewellery right now, it has become expensive whichever way you look at it. Should we expect the yellow metal to shine further or can one watch out for some bit of a correction?

Peter McGuire: It has certainly got some upside from here. It has had a mighty rally when we put our mind back to… I was in Mumbai only a couple of months ago and it has been up to $150 or more since then. So, it has had a very strong move to the upside and I feel as though there is even more to go. I would say in this quarter, it is hard to forecast how much further it will go up, but in the short run, it will probably reach $2350-2400 per ounce very quickly.


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There has been a very sharp up move in the last three to four months. But silver has been lagging. However, in the last one month, that too has managed to catch up 14-15%. Going forward, silver could outperform in terms of just the pace of returns versus gold?

Peter McGuire: I think so and there are a couple of reasons why there has been tremendous underinvestment across that whole silver market and that has been really over the last decade or more, this is the first part. We have got very strong industrial demand for silver and we have got a market that has been very suppressed. It has rallied to $2650 but it was around $2200-2300. I feel as though that has got more upside than gold over the next matter of months in the sense of a performance and a ratio to gold of course.

Everyone kept talking about the China economy not performing, now it seems like some data points have come in where we are seeing some bit of improvement in China’s economy, especially in terms of when you are talking about the manufacturing activity as well. It is at a 13-month high in China. How should one be reading that for the other metals? Should we compare copper or iron ore? What should one understand from this?

Peter McGuire: Well, I think a couple of things. The iron ore market has come under some pressure. But if you are looking across the base metals, aluminium, nickel, lead, tin, zinc have all performed quite strongly and we only saw last on the LME, they are up between 1.4% and 1.8%, still relatively cheap. You have got copper knocking on $9,000 a metric tonne’s door and tin running at around about $28,000 a metric tonne.

So, there is certainly a little bit more horsepower again on those markets, more opportunity for upside and yes, I just think that they have been suppressed again for quite a while and there just seems to be some ahead of them.

But what about crude? For the longest time, it was tempered, just around that $85 per barrel mark and finally, in a matter of a couple of days that too has managed to shoot up to almost $89.90 now. What levels do you foresee for crude?

Peter McGuire: When you are looking at it, it has had a tremendous run up and also when you are thinking about where WTI is $85 plus, 85 and a quarter, and you have got Brent sitting at $89.10, I feel as though that $90 will be taken pretty quickly and I would not be surprised. This month they take even $95. It is hard to forecast how much more aggressive, but it has had such a big move since the start of the first quarter, it has been dramatic. And if you are going to see these geopolitical concerns start to really ramp up, then that is the answer to drive crude prices higher. So, you have got the situation in Russia, we understand OPEC, and you have got geopolitics, so that is normally a perfect storm for higher prices.

The dollar index and Bitcoin both have been coming off a bit. Where do you see Bitcoin headed from 70,000 down to 65,000, what next?

Peter McGuire: I think it probably evaporated a little bit of that hot air. It has been choppy at $73 down to $63 and then back up to $70, that has been sold off again. It is certainly volatile, but that has been coming in April and that is going to be interesting how that plays out as it happens every four years.

It is going to remain choppy and as far as US dollar index, well, you are sitting there at the best part of 104.70, 104.80, I feel you do not see a rate cut in that June period. It will probably edge up over the next month or so if the talk is going to be to push it out. We are just going to see where inflation takes us. It is going to be a very interesting second quarter.

Roy Walsh

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