Credit Agricole Says Easy Money Shorting Gold Over on China.
“The market hasn’t quite fathomed the scale of annual Chinese buying just because of the wealth effect in China over the next coming years,” said Davis Hall, global head of foreign exchange and precious metals advisory. “I don’t think gold’s going to come back to $1,000, like many people are suggesting, because I’m seeing what’s happening in China.”
Bullion advanced 11 percent this year on rising consumption in Asia and as emerging-market turmoil and signs the U.S. recovery may be faltering boosted haven demand. China overtook India as the largest user last year as the biggest price drop in more than three decades spurred purchases, the World Gold Council said last week. Holdings in exchange-traded products stabilized this month after a record contraction last year.
“The easy money from being net short is probably behind us,” Hall said in an interview in Singapore on Feb. 24, referring to bets on lower prices. “I’m not bullish at current levels. Gold is an opportunistic trade. I’d much prefer to buy if it comes down to $1,250.”