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Australian miners still bullish on gold; broker says sell equities now

Theheads of Australia's EvolutionMining Ltd. and Northern Star Resources Ltd. believe the recent slip ingold price is just a hiccup and the precious metal will soon resume its upwardtrend.

OnJune 20, the gold price fell to around US$1,314 per ounce — its lowest levelsince the U.K. voted to leave the EU.

However,Evolution Executive Chairman Jake Klein said he remains bullish on the outlookfor gold. "This is a minor correction and I think in some ways it'shealthy," he said during a July 21 conference call.

Kleinsaid Brexit, thefailed Turkish coupand recent terror attacks "added weight to the cracks appearing" inthe geopolitical and financial climate.

"Inmany ways I still believe that the thesis of gold being a safe haven asset, andone which is getting additional and increasing interest from investors, is verymuch intact," he said.

Thisis an argument supported by the World Gold Council, which in late Junefollowing news of the Brexit vote said "gold is fulfilling its classicrole as a safe haven asset and performing exactly as the many investors thatbought it in the run up to the referendum will have hoped."

"Weexpect to see strong and sustained inflows into the gold market driven by theintense market uncertainty that now faces the global markets," theorganization said.

However,Foster Stockbroking analysts disagree that the gold price will continue to risepost-Brexit.

Whileboth the gold price and U.S. dollar have enjoyed rallies on the back of thereferendum, Foster said in a July 21 client note that it is gold that will needto retrace its gains.

"Ourreasoning is the markets realize now that Brexit, while a shock andrepresenting a degree of some uncertainty for Britain's economic future, won'tcompletely derail its economy nor totally disrupt the European Union," thebroker said.

Fostersees the price potentially contracting back as far as US$1,200 per ounce in theshort term.

"Thisis negative for gold equities, which are mostly already trading above their[net present values], factoring in a gold price well north of spot,"Foster said. "We recommend investors sell gold stocks in the short term."

Meanwhile,Northern Star Managing Director Bill Beament believes the next spike in goldprice will likely follow the U.S. election later this year.

"Obviouslythe next big catalyst is who wins the presidential election in [the U.S.] andthat has got more of an impact on the gold price than what Brexit will have, soit will be interesting," he said.