(Bloomberg) -- Amundi SA, Europe’s largest asset manager, expects a recovery in the gold price to around $4,500 an ounce following a selloff that dragged the metal to a three-month low.
“The worst is behind us,” said Lorenzo Portelli, head of cross-asset strategy at the Amundi Investment Institute. Traders’ positions are light following last week’s retreat, he added, which is “in favor of a rebound in the next weeks.”
Gold dropped below $4,000 an ounce last week to the lowest since mid-July, caught up in the broader unwinding of the artificial intelligence trade as investors sold bullion to cover losses elsewhere. The metal remains close to that threshold after losing nearly 10% since September, as hotter-than-expected inflation prints have bolstered expectations for the Federal Reserve to raise interest rates by year-end.
Portelli said the market has already “priced in the worst scenario for gold,” — inflation without recession, which would make the case for the Fed to hike rates aggressively, a headwind for non-yielding gold. The current economic outlook doesn’t call for more hikes than markets have already priced in, he said.
Still, gold is now unlikely by year-end to reach the $5,000-an-ounce level previously expected, Portelli said. An increment of at least 10% from the current level to around $4,500 is now the base case for Amundi, he added.