Van Eck Global gold strategies portfolio manager Joe Foster said his firm's recent outlook for the gold market found the price of gold will likely increase, with some stocks up 30 per cent.
“Gold stocks have done very poorly over the last several years as they have been out of favour,” Mr Foster said.
“Even though gold stocks are up from 2013 levels, with some stocks up some 30 per cent or so this year, we think they've got a long way to go to reach fair value. Valuations still look very attractive to us now,” he said.
Mr Foster said several factors could help support the price of gold over the coming year, which has formed a “solid base around US$1,200 per ounce”.
“Chinese demand is expected to increase, and lower costs of production, heightened geopolitical risk and an absence of persistent bullion exchange-traded product selling are helping to support the gold price at current levels,” Mr Foster said.
“In the US, financial-market and monetary policy risk remain,” he said. “We like to think of gold as a hedge against irresponsible policies from Washington, DC and possible asset bubbles or inflationary pressures, particularly.”
According to Mr Foster, the merger and acquisition activity of mining companies will likely rebound any further gains in the price of gold to US$1,400 per ounce, which could “positively impact" Australian gold miners.
