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Gold’s blistering start to 2016 may be just the beginning, according to Taurus Wealth Advisors Pte, which says bullion may prove to be this year’s best performing asset as central banks exhaust their firepower.

There’s a high probability the metal may surge to $1,350-to-$1,400 an ounce by the year-end, said Rainer Michael Preiss, a strategist at Singapore-based Taurus, a multi-family office with $1.4 billion under management. A rally to $1,400 needs a 13 percent gain from Monday, or 32 percent over the year.

Bullion has soared in 2016 as speculation that global growth is faltering prompted traders to cut bets on higher U.S. borrowing costs. The spread of negative interest rates in Japan and Europe has also added to gold’s appeal, with investors boosting holdings. Evolution Mining Ltd., Australia’s second-biggest producer, said last month a loss of faith among investors in central bankers’ ability to deal with challenges was spurring gains.

“Gold is the ultimate beneficiary when central banks run out of ammunition and more stimulus and negative interest increasingly become counterproductive,” Preiss said in an e-mail in response to questions. It’s “already outperforming global equities as well as most corporate bonds.”

Top Commodity

Bullion has topped the Bloomberg Commodity Index in 2016, rising 17 percent to $1,243.73 an ounce on Tuesday. That compares with the 6.8 percent loss in global stocks, 0.8 percent decline in Brent crude and the dollar’s 0.4 percent dip. Last month, gold posted the biggest monthly rise in four years while assets in exchange-traded funds surged 12 percent, the most since 2009.

Further inflows into bullion-backed ETFs are expected as prices gain, said Preiss. Taurus advises a strategic allocation of 5 percent to bullion and a further 2 percent to 3 percent for a basket of miners’ shares, with a higher allocation of 15 percent for tactical, trend-following portfolios.

Not everyone is bullish. Goldman Sachs Group Inc. has said the concerns that spurred gold’s gains this year aren’t warranted, and prices will slump back to $1,000 in 12 months as U.S. interest rates rise. Bullion may end the year at between $1,000 and $1,150, Oversea-Chinese Banking Corp.’s economist Barnabas Gan said last month.

“Our bearish view for gold is very much underpinned by the Fed rate hike in 2016,” Gan said on Tuesday in an interview on Bloomberg Television, reiterating his outlook. “We’re still calling for a Fed rate hike at least once this year, one-to-two more beyond that if the growth production and the recovery story is still on track,” he said. OCBC was ranked by Bloomberg as the top precious metals forecaster for the final quarter of last year.

Market Turmoil

After the Federal Reserve raised rates in December for the first time in almost a decade, market turmoil in 2016 prompted traders to cut the odds on a further move. There’s now just a 10 percent chance of an increase this month, down from 51 percent at the start of the year.

Fed Bank of Cleveland President Loretta Mester, a voter on policy this year, said last week the fundamentals underlying the U.S. remain strong and the central bank should stay on track for a gradual tightening. For Preiss, even if the Fed does act, gold’s rally would probably be sustained.

“The Fed might have two more interest rate hikes in store potentially, but even in such an environment gold could hold up and even rally further as the market narrative is changing,” said Preiss. “Long gold might be the best macro trade to the upside for 2016 and beyond.”

Reference: Bloomberg