Gold sees brief bounce after Brussels attacks, but analyst sees $1,450 ahead

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The horrific terrorist bombings in Brussels, Belgium, sent gold galloping toward $1,260 early Tuesday before a pullback that nonetheless kept the metal in positive territory.

Golds advance Tuesday is mainly related to the attacks in Brussels, ABN AMRO analyst Georgette Boele told Reuters. Gold is being bought as a safe haven.

Though geopolitical events like terrorist attacks can give a short-term lift to bullion, some analysts argue that the metal is more influenced by moves in the U.S. dollar and changes in central-bank monetary policy. Thus, with no new terrorist attacks under way, stocks stabilized and gold surrendered some of its gains.

Brexit odds now rising: Meanwhile, Chicago Federal Reserve President Charles Evans urged a data-dependent, wait-and-see approach regarding the central banks next rate hike essentially the same vague message Chairwoman Janet Yellen pushed at her post-meeting news conference last week. Evans dovish comments followed more hawkish statements Monday from two other Fed presidents.

The Brussels attacks could have a more immediate effect on the United Kingdoms June referendum on whether to leave the European Union. Oddsmakers are now saying a so-called Brexit has become more likely. A Brexit in turn could increase the risk that Britain falls back into a recession, thus forcing its central bank to keep easy money flowing to boost the economy.

Bank ups forecast to $1,370: ABNs Boele remains positive on golds longer-term prospects. Once a notable bear on the yellow metal, Boele made news earlier this year when she turned bullish.

Ranked by Bloomberg as the third-most-accurate gold forecaster in the fourth quarter of 2016, Boele now has increased her price target for the second time this year. The bank now sees bullion ending 2016 at $1,370, up from the prior forecast of $1,300, while $1,450 is now its 2017 year-end call, up from $1,300.

Over the recent years, the most dominant driver for gold prices has been the direction of the U.S. dollar, the bank wrote, citing the Feds recent scale-back of its rate-hiking timetable. As we are now expecting a lower dollar over the coming years, a crucial headwind is taken away. Investors will likely buy gold because of lower U.S. real yields and as some may see gold as a possible inflation hedge. Therefore, gold prices will unlikely suffer next year when we expect gradual Fed rate hikes.

Firm buying gold dips: Other firms also are bullish on gold, or at least have been forced to lift their price forecasts after the yellow metal gained about 17% on the year. Morgan Stanley and Societe Generale both raised their targets before the Feds meeting last week, and Guild Investment Management also has thrown its hat into the ring.

The anxieties that have supportedgolds rally so far this year will ebb and flow with the course of global economic and financial news, Guild analysts wrote, but even so, we believe that technical factors and market participants suspicions about the competence of governments and central banks will continue to make the yellow metal shine in investors eyes. We are bullish ongoldover the intermediate term.We will be adding to goldpositions during periods of price decline.

$1,275 could power golds next leg up: And technician Zev Spiro of Orips Research just made a major call on CNBC on Tuesday from a chart-analysis perspective.

From a technical perspective I think we have a lot of room [to rise] over the coming months, Spiro said. Currently were in a consolidation. But earlier this month, a positive signal developed in gold as a move occurred above resistance of a descending channel that began 2013. So the break above the upper channel line, which is resistance of the channel, signals an end to the primary downtrend and a shift in trend from negative to positive. So despite the huge rally already seen in gold throughout January and February, the break above the descending channel signals higher prices with a minimum expected price objective in the $1,450 area. Its a big move, Spiro said, but it might take a month to six months to occur in a potentially choppy advance over which time some consolidation continues.

Once we do break back above the $1,275-$1,280 area, thats where I suspect a new wave of buying is going to come in and upward momentum is going to carry prices higher.

So while golds bounce from the Brussels tragedy might be short-lived unless new attacks occur, the longer-term picture looks bullish from both a fundamental and a technical perspective.