The price of gold hit an all-time high this week, and Wall Street thinks it will keep climbing. Heres what some of the worlds biggest banks forecast for the precious metal.
Gold closed at its highest level ever on Monday as investors flock to the safe haven asset in times of huge uncertainty for markets.
Gold remains sensitive to both negative and positive news as the dollar has been waning and investors take stock of rising coronavirus cases, US-China tensions, and fears for the dollar.
This week, Goldman Sachs has revised its 12-month forecast to $2300 per ounce, a 20% jump from current levels.
Goldman’s is the latest bullish prediction from a major bank about gold, with Bank of America forecasting that gold could hit $3,000 in the next 18 months.
Markets Insider has rounded up what some of the biggest banks think about the precious metal’s future prospects.
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Gold has been the darling of financial markets in recent days, surging to record highs as investors flood into safe haven assets due to increased uncertainty around the world.
The precious metal closed at $1,942.55 per ounce on Monday — it’s highest price in history amid rising diplomatic tensions between US and China, and a surge in virus cases globally.
That has only been one of the factor which has kept gold traders on their toes in recent weeks.
Expectations on what a post-COVID economy will look like, an unclear timeline for a vaccine, and geopolitical clashes between the world’s two biggest economies, have been only a few of the factors pushing the precious metal sideways.
Some of the world’s biggest banks have rushed to revise their forecasts for gold as the economic climate changes day by day.
Markets Insider has rounded up some of the biggest banks’ outlook for the precious metal.
Price target: $2000 by September-end.
“We’re bullish on gold and have been adding it into our managed portfolios in recent weeks,” a UBS team led by Kiran Ganesh wrote.
“combination of real rates that are low and staying low, a weaker US dollar, and rising geopolitical uncertainty are all supportive. We now expect prices to reach USD 2,000/oz by end-September.”
“We have raised our end-March and end-June 2021 forecast by USD 100/oz as well, but we continue to see a price peak over the next six months.”
“Next year, we expect the economic recovery to pick up speed, a vaccine to become available and the extreme dovishness of central banks to peak—developments that could trigger a toppingout in ETF inflows and therefore a peak in the gold price.
Price target: $2000-$2100
“We think the gold rally is far from over. In today’s bull market cycle, it is only a modest stretch to envision fundamentals falling into place for USD 2,000/oz to be within reach,” Deutsche Bank’s Michael Hsueh wrote.
“In fact, we think fundamentals will support a range between USD 2,000-2,100/oz, well before the market begins to anticipate Fed tightening. In other words, such a range would not take for granted any increased premium to fair value.”
Price target: $2000
“After maintaining a bullish view on gold prices for over two and a half years, we believe bullion will likely see one last hurrah before prices turn lower into year-end,” a JPMorgan team including Natasha Kaneva, Gregory C Shearer, and Thomas Anthonj said.
“Light positioning and surging momentum in the near term can continue to carry gold higher over the next month or so to a level around $2,000/oz but the move will not be supported by fundamentals.
“Therefore, we think the current price is close to a peak and turn neutral on gold.
“The size of major central bank balance sheets has been stable at 21 to 28% of GDP in the past decade just like the gold price,” analysts Michael Jalonen and Lawson Winder wrote.
“As central banks & governments double their balance sheets & fiscal deficits we up our 18m gold target from $2000 to $3000/oz.”
“Still, a strong USD backdrop, falling equity market volatility, and weak jewelry demand in India & China may remain headwinds.”
Price target: $2,300 by July 2021.
“The recent surge in gold prices to new all-time highs has substantially outpaced both the rise in real rates and other US dollar alternatives, like the Euro, Yen and Swiss Franc,” Goldman analysts wrote.
“We believe this disconnect is being driven by a potential shift in the US Fed towards an inflationary bias against a backdrop of rising geopolitical tensions, elevated US domestic political and social uncertainty,and a growing second wave of COVID-19 related infections,” a note, authored by Jeffrie Currie, Mikhail Sprogis, Daniel Sharp, Damien Courvalin, and Michael Hinds said.
“With more downside expected in US real interest rates, we are once again reiterating our long gold recommendation from March and are raising our 12-month gold and silver price forecasts to $2300/toz and $30/toz respectively from $2000/toz and $22/toz.”
“With gold having broken through the 2011 high of $1,900, we would expect another leg higher and the price to approach $2,000. Gold will continue to benefit from the weakening US Dollar, which has been in a freefall for the last two months,” Gregory Leo, IDB’s chief investment officer said.
“The US Federal Reserve’s ultra-easy monetary policy has pushed US rates so low they are now longer as attractive to the global community as they once were, which has caused the Dollar to plummet and increased the attraction of Gold.”