Gold’s sharp drop Tuesday is surprising given the uncertainty in Greece and the ongoing conflict in Ukraine, says Julian Jessop, head of commodity research at Capital Economics. He added that it appears the market is paying more attention to the prospect that the Federal Reserve will raise rates in June as the gold market is moving in-line with higher U.S. treasury yields. However, he adds that they still see more potential for gold and expect prices to end the year at $1,400 a ounce. “While we continue to expect a first Fed move in June, we still see more positives than negatives over the year as a whole – especially if the crisis in Greece escalates further,” he says. “Markets still seem remarkably complacent about the chances that Greece will be forced out of the euro-zone and about the risks of contagion to other peripheral economies.”
