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Gold Market Is Not in a Bubble: Metals Strategist

Even with gold’s recent weakness, some strategists say investors should use the pullback as a buying opportunity. Michael Widmer, metals strategist at Bank of America-Merrill Lynch, discussed his view on the commodity.

Gold to $1500?

“I don’t think [gold] is really in a bubble right now,” Widmer told CNBC.

“If you look at what drove some of the buying, we do still see a lot of reserve diversification from central banks. Reserve diversification by definition means they’re not necessarily buying into gold markets because they expect huge price rises; they buy gold because it’s good diversification.”

Widmer said the gold market remains relatively strong and remains relatively well-supported and expects prices to hit $1,500 an ounce in three years.

“We might be cautious for the immediate near-term,” he said. “You do see better economic data coming out of the U.S. right now and the dollar coming back a little bit... If you look in the medium term, you can still make an argument for continued reserve diversification from central banks and that emerging markets continue to buy gold as well.”

  • Watch Widmer's Previous Appearance on CNBC (Aug. 12, 2009)

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No immediate information was available for Widmer or his firm.