You can see $1,900 Gold by October end, if QE history repeats: Deutsche Bank

Sunday, October 21, 2012
By Paul Martin

Commodity Online
20 October 2012

After QE1 and QE2, gold prices rallied for up to 50 trading days and by around 15%. If it repeated today, this would imply gold prices rising to $1,900/oz by the end of October,

LONDON (Commodity Online): After QE1 and QE2, gold prices rallied for up to 50 trading days and by around 15%. If it repeated today, this would imply gold prices rising to $1,900/oz by the end of October, said Deutsche Bank, the Germany’s largest bank, in a weekly commodities report.

Global gold prices ended lower for the second week in a row. The most-active December gold contract on the Comex division of the New York Mercantile Exchange settled at $1,724 an ounce, down 2% on the week.

According to the German bank, gold’s performance over the past few days would, if sustained, suggest that the impact of this round of QE is fading earlier and more rapidly than previous QE episodes.

The past few weeks has also seen a significant compression in gold implied volatility, which has fallen to multi year lows. This reduction in implied vol has also been evident in other asset classes such as equities and FX. We would identify US dollar strength as the main risk to gold prices and the outlook for implied vol.

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