Gartman Turns Bullish as Gold Hits 3-Month High

Wednesday, 12 Feb 2014 08:03 PM

By Dan Weil

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Gold prices hit three-month highs Wednesday, and Dennis Gartman, publisher of The Gartman Letter, thinks the rally has further to run.

Gold plunged 28 percent last year, but has rebounded 7.6 percent so far in 2014. Gold futures for April delivery settled at $1,295 Wednesday on New York's Comex, after trading as high as $1,296.40, the highest since Nov. 8.

"In the past week or so, it's been necessary to turn bullish on the gold market," Gartman told Yahoo.

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Gold has pushed through key resistance levels not only against the dollar, but also against the euro, yen, British pound and Australian dollar, he says. "We're seeing some important breakouts in gold relative to all other currencies, and I think that's important."

Gartman points to several factors that will boost gold: the Federal Reserve's accommodative  monetary policy, global currency deflation, a bottoming of commodity prices and strong demand from China.

"The Chinese are back buying gold in a rather aggressive fashion," he said. "China's demand for gold last year was up 41 percent from the previous year. Those are impressive numbers."

But not everyone is bullish on the yellow metal.

"If you look at what investors have been doing, it is to use any rebound in the gold market to reduce exposure," Credit Suisse analyst Karim Cherif told Reuters. "We expect prices to moderate again, as there is no real reason for investors to hold gold. . . . The dollar will strengthen, yields will move moderately higher, and assets like equities should continue to do well after the healthy correction seen earlier in the year."

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