Gold bull sees near-term weakness because the market is 'prematurely pricing in a rate cut'

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Metals expert Suki Cooper sees gold prices hitting a speed bump before they can challenge last year’s highs.

Cooper, Standard Chartered’s executive director of precious metals research, blames it on growing speculation that the Federal Reserve will lower rates within the next 12 months.

“We really think it’s the market prematurely pricing in a cut for this year,” she said Tuesday on CNBC’s “Futures Now.”

A rate cut is not expected to happen at this week’s Fed meeting. But Wall Street is pricing in a 25 percent chance of a rate cut in December, according to CME’s Fed WatchTool. Cooper contends that’s providing bearish resistance.

She expects gold prices to average $1,285 in the second quarter. Right now, it’s trading just above $1,300 an ounce.

However, Cooper predicts gold will regain its luster once investors realize the Fed isn’t moving on interest rates.

“We expect gold to end the year on a strong note,” she said. “It’s in the fourth quarter that we’ll see gold prices testing the highs that we saw in 2018 and 2017 and potentially matching the highs from five years ago.”

She estimates the precious metal’s prices will average $1,325 in the fourth quarter, just $44 below its 2018 intraday high.

Cooper suggested in late January that it could be gold’s year. She still sees ETF demand for the metal and gold-friendly activity surrounding the dollar as a major catalysts behind a second-half bullish move.

“We expect the dollar to weaken,” Cooper said. “Also, central banks continue to be buyers as well.”

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