Deadly accurate gold forecaster says price could run as high as $1,400

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Gold soared again Wednesday after two heavy doses of bad economic news coldcocked the U.S. outlook.

First off, although the U.S. services sector has been hailed as a bright spot in the economy, the latest PMI survey showed otherwise: It collapsed to 49.8, well below expectations of 53.5. The decline signaled the weakest service-sector performance since the government shutdown temporarily disrupted business activity in October 2013, Markit noted, forecasting a significant risk of the U.S. economy falling into contraction in the first quarter.

Now on to housing, another purported pillar of the recovery:New-home sales declined by 9.2% in January, the biggest drop for that month going back to 2009, and prices also took a big hit.

Stocks struggled early on but pared some losses by afternoon and eventually turned positive as oil prices also remained volatile. Gold, in contrast, pulled off another big advance and ended at more-than-one-week highs, not far from its 2016 peak near $1,260, hit Feb. 11.

Hyper bullish sentiment: The metal topped $1,245 and gained more than 1.5%, while silver also rose 1.2% to reach $15.46 before a late-afternoon pullback.

Inflows into gold ETFs continue to be a key driver for the metal. Retail sentiment for gold has suddenly become hyper bullish, Insignia Consultants analyst Chintan Karnani told MarketWatch, citing ETF demand.

Meanwhile, central-bank support for gold also remains a robust trend, with both Kazakhstan and Russia increasing their bullion reserves in December, according to new IMF data.

Up about 16% on the year, golds continuing strength has forced another high-profile bearish analyst to reconsider his forecasts. ABN AMRO exec Georgette Boele recently made news by retooling her price target from $900 to $1,300. Now one of the most accurate gold forecasters of recent years also is sounding a more optimistic note on the metal, according to Bloomberg.

Gold showing its superhero mettle: Whereas Oversea-Chinese Banking Corp. economist Barnabas Gan previously predicted gold would finish the year near $950, bullions staying power has cause him to soften his stance. Hes now raised his price goal to $1,000-$1,150 by years end, says it will hold the $1,200 level this quarter, and thinks it could run much higher under the right conditions.

Should risk aversion dominate amid intensified global growth headwinds, gold may well rally to as high as $1,400, he wrote, noting that amid the global equity downturn, very low oil prices and magnified risk aversion seen since the start of the year, one hero stood up strong, providing shelter, describing bullion as a gold, the superhero.

If golds surprising outperformance in 2016 gains further momentum, then even Goldman Sachs will have to change its official line on the yellow metal. Almost everyone thinks theyre wrong at this point, anyhow.