Futures Now

Wells Fargo turns positive on gold, here's how the firm sees it going

Wells Fargo turns bullish on gold, sees near-term gains

With gold trading around one-month lows, the Wells Fargo Investment Institute is getting bullish.

John LaForge, the firm's head of real asset strategy, sees gold regaining its luster and delivering profits for investors.

"When your stock corrections are in the 10 to 15 percent level, which is kind of what we're in now, what we often find is that investors go out and search for some kind of insurance," he said Tuesday on CNBC's "Futures Now." "They typically will buy gold — even on a bounce in stocks."

LaForge's bullish case is built on more than just the stock market cycle. The U.S. dollar index, which hit 52-week highs this week, is also a key element of his refreshed forecast.

"The dollar is a little too high. It has to back off," he said.

Typically, gold and the greenback move in opposite directions. So, as the dollar softens, it should provide a positive catalyst for the yellow metal.

However, LaForge doesn't believe it'll create enough momentum to push gold back above its record high of $1,891.90 hit in 2011. Rather, he predicts $1,300 an ounce within the next 12 months, an 8 percent gain from current levels.

"$1,200 [an ounce currently] is not so bad when you look around at all these different assets prices getting crushed," he said.

Gold is down more than 8 percent so far this year. LaForge cites a glut in the precious for much of the sluggishness.

"We're still working off all the excesses from when gold was at $1,900," LaForge said. "When that happens, when you have excess supply like we do in the system, your bounces just don't become as meaningful."