Gold in a supercycle: BMO

Despite a softening in the gold price this year, BMO Capital Markets managing director of commodities research Colin Hamilton says the metal is holding up well (reports MiningNews).
16th April 2021

Despite a softening in the gold price this year, BMO Capital Markets managing director of commodities research Colin Hamilton says the metal is holding up well (reports MiningNews).

After peaking at over US$2000 an ounce in August 2020, gold has fallen as low as $1683/oz last month.

It currently sits at about $1747/oz.

"This is still a very good gold price," Hamilton told the virtual World Gold Forum overnight.

Despite headwinds including a strong dollar, rising yields and ETF outflows, gold had held up well, according to Hamilton.

He said the gold price is on track for its highest average nominal price in history in 2021.

Despite the term "supercycle" being attributed to base metals, Hamilton said gold was actually in a supercycle.

"For supercycles, you need duration," he said.

"Actually, gold is about the only commodity I cover that is in a supercycle.

"We've now been almost 15 years above the long-term average.

"Statistically, that's out of control and that highlights the changes we've seen in this market."

Despite a pullback in ETF demand, Hamilton said there had been an uptick in consumer demand for gold.

Indian gold imports reached a record in March and American Eagle gold coin sales reached a March quarter record of 400,000 ounces.

That comes at a time when production is declining.

China, the world's largest producer, has peaked and is in decline.

"I still think that is underappreciated by the sector as a whole," Hamilton said.

He expects that trend to continue, particularly as China tightens controls on pollution.

"China may well be usurped by Australia in the coming years," he said.

Read more at https://www.miningnews.net/events-coverage/news/1408248/gold-in-supercycle-bmo

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