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Moneycontrol.com - Microsec Commerze sees gold breaching $1,250/oz by Feb - Nov 05, 2009
Friday, November 06, 01:41 pm IST
• CNBC TV18
Microsec Commerze sees gold breaching
$1,250/oz by Feb
Published on Wed, Nov 04, 2009 at 20:46 | Updated at Thu, Nov 05, 2009 at 21:02 | Source : CNBC-
Gold's record breaking rally continues. Prices of gold zoomed to record highs of USD
1092 per ounce. In an interview with CNBC-TV18, Shamik Bose Executive Director
of Microsec Commerz spoke about the precious metal’s upsurge and the best way to
Below is a verbatim transcript of the exclusive interview with Shamik Bose on CNBC-
TV18. Also watch the accompanying video with full audio on the site.
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Q: What is your near term outlook on gold? Do you think this rally would continue?
A: Yes, I do because you see it made a new high yesterday evening and after consolidating
around USD 1040 per ounce – going down towards USD 1030 per ounce – it has rallied very
suddenly over the last two-days if you look at the charts. Looking at the very impressive closing
last night of USD 1083 per ounce on the spot market, I expect USD 1092 per ounce to be an
interim pit stop. USD 1100 per ounce is very much on the cards before the weekend or well
before the weekend. Our prediction is USD 1,250 per ounce by February and some people feel if
the dollar declines this will happen before December or by end of December. Thus, USD 1092
per ounce is just a pit stop and the rally should continue tonight and thereafter.
Q: We saw the Reserve Bank of India (RBI) make its biggest purchase in a single day in the
last 30 years. Given the context of how some central banks have taken a view on the
dollar, do you expect the dollar to remain under pressure?
A: That’s a good question and I am glad that you have asked me because dollar has been under
pressure for a while now and because of that the dollar has been under pressure the dollar carry
trade has been worked out. As people what they were doing with the Yen carry trade before – are
now borrowing in dollars – shorting dollars to protect the downside – and they are buying other
assets like emerging market equities, metals, crude oil, gold and silver. Only gold being a little
different is that the diversification into gold was that gold was treated as a currency – slightly
better store of value then the Yen or the Euro or the Chinese Won despite what the publicity said.
What is going to happen is that if dollar continues to decline this trend will be very much there.
There is an FOMC meeting tonight and if FOMC comes out and says we will need to tighten
going forward to protect ourselves from inflationary pressures – there has been too much of
monetization and too much of quantity easing and next year this time we expect interest rates to
be at 2% rather than at 0.25% – then the whole ball of wax will come apart. Then the dollar will
strengthen and that rally will be very fast. It will be a snap back rally. That is why you are at a very
volatile precipice now.
The dollar will continue to decline over a period of time but in the short term it may not. You may
see a very volatile snap back rally if the carry trade unwound.
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