Analysts at Citi and Goldman Sachs predict that the price of gold will continue to charge higher despite the improved global economic outlook following multiple coronavirus vaccine breakthroughs.
The traditional safe haven asset hit an all-time high in August of $2,074.88 per ounce, amid fears that the coronavirus crisis looked set to continue indefinitely. Spot gold was recently at $1,812.66 an ounce, having hit its lowest since July 17 at $1,800.01 on Tuesday. U.S. gold futures at $1,811.00, Reuters reported.
A number of COVID vaccine producers have bolstered hopes that an end to the pandemic could be in sight.
Despite this, analysts on Wall Street see higher prices for the precious metal, CNBC reported.
Citi Head of Commodities Research Aakash Doshi said in a note that he expected vaccine news to slow, but not end, gold’s secular bull cycle.
Citi expects gold to end 2020 at around $1,900 per ounce, a 22.5% increase on the start of the year. Citi has set a six- to 12-month point-price target of $2,325 per ounce.
Goldman Sachs echoed this sentiment in a recent note reiterating their target price for gold in 2021 at $2,300 per ounce.
Goldman analysts also cited a recovery in developed market demand based on “concerns over currency debasement and recovery in retail purchases,” CNBC reported.
“In our view the structural bull market for gold is not over and will resume next year as inflation expectations move higher, the U.S. dollar weakens and EM retail demand continues to recover,” Goldman analysts Mikhail Sprogis and Jeffrey Currie said in the note.
Other market observers also remain optimistic about the longer-term outlook for gold.
Joe Biden plans to nominate former Federal Reserve Chair Janet Yellen to serve as his Treasury secretary, people familiar with the matter said.
That should boost prospects for fiscal stimulus going forward, which along with protracted low interest rates will provide a supportive environment for gold, according to Carsten Fritsch, an analyst at Commerzbank AG.
“After its current losing streak, gold should therefore begin climbing again, even if this may well take some time yet, and is likely to start from a lower level,” he wrote in a note, Bloomberg reported.
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