Gold prices have had a sharp run up over 41 percent in the last year. But with money piling in and more people bullish than bearish on gold, does it have more room to run? Rebecca Patterson, head of global foreign exchange and commodities at JPMorgan Private Bank shared her views.
“When the dollar falls, gold strengthens; when the dollar rises, gold falls,” Patterson told CNBC.
“That relationship’s been getting stronger over the last 10 years. It’s one of the reasons why if we do get a dip in gold, we’d be looking to buy it because the dollar is going to get weaker from here.”
Patterson said $1,026 would be a “big technical support level” for gold and her firm would be looking to buy at that range.
“We’ve been selling a ton of puts on gold—short-term puts, 6 months or so with 975 strikes**," said Patterson. "If it fell that much, we’d be thrilled to buy gold.”
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Patterson said she expects gold prices to go higher and the dollar to go lower.
“Maybe not so much against the euro, sterling or yen, but on a broad basis, we are still happy to be bears on the dollar,” she said.
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** Strike: The specified price on an option contract at which the contract may be exercised, whereby a call option buyer can buy the underlier or a put option buyer can sell the underlier. The buyer's profit from exercising the option is the amount by which the strike price exceeds the spot price (in the case of a call), or the amount by which the spot price exceeds the strike price (in the case of a put). In general, the smaller the difference between spot and strike price, the higher the option premium . also called exercise price. (Check Out:CNBC.com Education Center)
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No immediate information was available Patterson or her firm.