The gold industry expects bullion to rise 10% this year, despite the fact that rate analysts at the US investment bank Goldman Sachs forecast a sharp rise in the price of gold this year. At the end of March, they predicted an increase to 2,300 U.S. dollars per troy ounce over a three-month horizon and even a price of 2,500 U.S. dollars over a six- and 12-month horizon.
The monetary policy of the Federal Reserve, that is,. The U.S. Central Bank. UU.
. He considers that gold is a good hedge against the risks of falling, given the possible rise, while cryptocurrencies would still be far from “becoming a long-term reserve of defensive value”, such as gold. The LBMA cites the fall in interest rates in the United States, as well as monetary and fiscal policy and the weakness of the US dollar as the main reasons mentioned by the analysts surveyed. The range of forecasts for this year is wide due to uncertainties surrounding geopolitics, the COVID-19 pandemic and expectations for economic growth.
A rise in the inflation rate could increase investor fear of higher inflation rates in the long term, which in terms could boost demand for gold as a hedge against inflation. Other factors that explain the rise in the price of gold could be the recovery in demand for gold in emerging markets such as China and India, as well as expectations of a weaker dollar. Gold will soar 22% next year as investors hedge against rising inflation. According to Goldman Sachs, Bank analysts believe that COVID-19 vaccines will boost economic recovery beyond China, which could result in a reduction in monetary and fiscal stimuli.
Coupled with rising 10-year rates, this could cause the price of gold to fall. According to a team of analysts from Goldman Sachs, the global investment bank, the rise in the price of gold to new highs, which has recently surpassed increases in real interest rates and other alternatives to the US dollar, has been driven by “a possible change in the United States. UU. Aimed at an inflationary bias in a context of rising geopolitical tensions, it elevated the U.S.
National political and social uncertainty and a growing second wave of infections related to COVID-19.According to analysts, along with a record level of debt accumulation by the United States government, real concern has been raised about the longevity of the US dollar as a reserve currency. Another observation made by analysts led by Jeffrey Currie is that hedges against inflation, such as commodities and stocks, are likely to be much cheaper right now than they could be in the future, when inflation could be on the horizon. The current devaluation, which is reducing the value of currencies, and the accumulation of debt “sow the seeds of future inflationary risks, despite the fact that inflationary risks are still low today.”. According to Dhar, the key question is how much the upturn will increase after that.
Gold prices could even exceed 2,500 US dollars per ounce. The “key story” behind the summer gold rally was not the fall in nominal yields, but rather the rise in 10-year inflation expectations. Understanding how sustainable that is really the key to knowing if this rally has more stages to play, he added. Public spending, deficits and central bank balance sheets are expected to increase significantly.
While the strength of the US dollar and weak demand for jewelry from countries such as India and China will put pressure on the price of gold, investor demand is expected to eventually push the price of gold higher. Goldman Sachs recommended buying gold at its current price. Goldman Sachs tells customers it's time to buy gold, Financial Times The currency of last resort, Business Insider Goldman Sachs precious metals analysts assume in a study that the price of gold will continue to rise next year due to economic and financial uncertainties. According to analysts, the main reason is the increase in uncertainty due to the discussion on Modern Monetary Theory (MMT), which is currently being promoted especially in the United States by Democratic presidential candidates such as Bernie Sanders, as well as trade tensions and the upcoming US presidential elections.
Under modern monetary theory, deficits and debt are generally considered relatively unproblematic as long as inflation remains low. In particular, progressive supporters of this theory often argue that the state should make greater use of low interest rates to invest in infrastructure and social programs, even if this would lead to an increase in deficit and debt, and that the government should increase growth and combat inequality through targeted spending. Gold would continue to be considered a safe haven and an investment that is not correlated with other asset classes, such as stocks. In times of crisis or when risks to economic development are perceived, there would be an increase in demand for the precious metal.
According to Goldman Sachs, the uncertainty described “may be one of the reasons why we see evidence of an accumulation of gold without ETFs, since people with high net worth may want to store gold outside the financial system.”. Goldman Sachs boosts gold: CNBC Widmer cites several reasons for a possible price increase. In addition to trade conflicts, flexible monetary policy and the resulting increase in inflation expectations, as well as purchases by central banks, could cause further price increases. According to Widmer, there is a strong correlation between central bank purchases of gold and rising gold prices.
Goldman Sachs analysts expect a gold price of 1,600 US dollars in the next six months after the recent rise in price to more than 1,500 US dollars. The bank cites the worsening outlook for the world economy and the growing trade disputes between the United States. and China as determining factors. Both would improve the attractiveness of gold as a hedge against financial turmoil, as investors seek security.
Goldman Sachs analysts have significantly raised their forecasts for the price of gold over the next 12 months. In the next three months, they now expect a price level of 1,450 US dollars, 100 dollars more than the last estimate. Price expectations for 6 and 12 months have also been adjusted upwards by 125 and 50 US dollars, respectively, to reach 1,475 US dollars each. The main arguments cited for a rise in the price of gold are the increase in purchases of gold from central banks and the decrease in real interest rates.
The World Bank cites expectations of strong demand and a prolonged pause in US interest rate hikes. The Federal Reserve as a driver of the rise in the price of gold. However, what is striking is that the forecasts cover a wide range: the forecasts differ by up to 325 USD, which corresponds to about a quarter of the expected price. This shows how divided analysts are about the evolution of the price of gold.
In addition to Brexit and the trade war between the US. and China, the uncertainty is caused by the level of interest rates in the United States. U.S., the strength of the dollar, geopolitical factors and global economic growth. Eddie Nagao, of the Tokyo Sumitomo Corporation, is the most optimistic, since he believes that the Federal Reserve will not be able to raise interest rates as desired and that the risk of a recession in the United States.
is now higher and volatility is likely to increase. Therefore, institutional and private investors would prefer to invest in gold over other investments. However, Eddie Nagao is also trading in a range of 1,175 to 1,475 US dollars. In this context, the Federal Reserve could make two unplanned rate hikes that could strengthen the dollar, with negative consequences for the price of gold.
In Asian markets, the trade war could reduce demand for gold. According to the commodity outlook recently released by Scotiabank, the price of gold will remain more or less stable compared to current prices, “caught between rising rates and the weakness of the US dollar.”. Jeffrey Currie, from Goldman Sach, believes that the growing demand for “defensive assets”, as well as the increase in central bank purchases, are the main drivers. They should be due to rising geopolitical tensions, as well as fears of a next recession.
In their report, analysts say that their overall macroeconomic assessment has remained virtually unchanged and that they remain optimistic about gold, silver and copper. They justify the reduction in their forecasts with a positive outlook for the price of the dollar, which they consider to be the greatest threat to the price of gold in the short and long term. On the contrary, the fundamentals of supply and demand and the historical dynamics at the end of the cycle pointed to an increase in gold prices. In their report, analysts describe a negative correlation between the U.S.
Dollar and gold, silver and copper, pointing out that the U.S. The dollar has risen 1.3% over the past four weeks, while gold has fallen by 0.85% over the same period. According to the firm, demand for gold in emerging markets began to strengthen in the fourth quarter, as global demand for jewelry totaled 650 tons, the fourth best quarterly performance. According to analysts, the price of gold has been able to withstand rising bond yields due to this renewed demand for gold from emerging markets.
Analysts said that the weak trend in the price of gold was not related to the drastic increase in the price of bitcoin, as evidenced by the absence of the otherwise expected broad exit from gold ETFs. Analysts consider gold and cryptocurrencies to be very different asset classes. Analysts say that uncertainty among market participants has decreased due to the successful implementation of tax reform and the apparently smooth transition to a new Fed president. In the long term, analysts expect demand for gold to increase due to strong growth in emerging markets and that the “wealth” channel will end up dominating demand for gold.
According to the analyst, central bank monetary policy, inflation, risk differentials, current economic developments and reactions to political risks are generally essential for the evolution of the price of gold, since gold has the status of a safe haven in crises. Demand for the price of gold is key, since investment demand plays a much more important role in the evolution of the price of gold than demand for jewelry, since the former is much more dynamic. He also sees gold only as an investment, which has lost its status as a commodity since the 90s. According to the analyst, contrary to popular opinion, production costs don't really matter for the price of gold.
As for the fact that the price of gold has remained at a high level for months, although the Federal Reserve has announced further increases in interest rates, Mr. Weinberg points out that real interest rates would be much more important than the nominal interest rates that are currently rising. However, the Federal Reserve would apparently not raise the key rate as much as inflation is rising. However, low or negative real interest rates would provide a good environment for gold and would further strengthen demand from central banks and investors.
According to Weinberg, investors would not invest in gold out of fear of geopolitical risks or a total loss of assets, but the precious metal would currently serve as capital protection for them, out of fear of low interest rates. After the short-lived uptick in the price of gold caused by Trump's electoral victory, according to the bank, investor confidence took a “dramatic 180-degree turn”. ABN AMRO says that the increase in the U.S. Treasury bond yields and the upturn in the U.S.
The stock markets, combined with an environment of positive investor confidence, substantially strengthened the U.S. The dollar and caused gold prices to fall. According to the bank, the increase in inflation expectations is more than offset by the increase in the United States. Real yields and the absence of major inflationary fears would push the price of gold lower.
However, the bank said it would not see much room to continue increasing the price of gold, since there was not much room for the U.S. In addition, the Chinese economy would have only a limited margin to contribute to the U.S. The weakness of the dollar by boosting the strength of emerging market currencies, which, in turn, would weaken the United States. After the multi-year correction in the price of gold, investors could once again see gold as a safe haven if needs arise.
The price of gold is likely to be supported by strong retail demand from China and India, while only limited support is expected to come from central banks. Scotia-Mocatta expects a further fall in the price of gold in the coming years. This estimate is based primarily on the assumption that the investor's need for safe havens would have decreased. The stability of financial markets and, in particular, the fact that stocks went from an all-time high to an all-time high, would have entailed a high opportunity cost to maintain gold.
Another factor is seen in the low physical demand for gold in India and China. Analysts also mention that a stronger outlook for the price of gold may not be that far off, as the improvement in demand for gold from India, China's return to the market and a stock market correction could cause an upturn. The reason for the current fall in the price of the precious metal is the surprisingly positive data from the US. And the concomitant fear of a change in monetary policy.
The prospect of ending ultra-flexible monetary policy has led Goldman Sachs to lower its forecast for the price of gold. Forecasts show analysts' assumption that some investors have lost faith in gold as a store of value, as the fall in its price will cause the first annual loss in 13 years. According to Robin Bhar, an analyst at Societe Generale SA in London and, in Bloomberg's view, the most accurate predictor of precious metals in the last two years, “a lot of gold has been held for speculative, investment and value reserve purposes, and that is no small reason for the future. If you sell your gold and invest your money in stocks, other fixed-income assets or real estate, you will show a return.
The bull market for gold is definitely over. Goldman Sachs assumes that the price of gold is accelerating its fall due to a fall in the United States. An economy that would improve even more and that it could take several years before there was a sustained increase in prices driven by higher rates of inflation. Societe Generale assumes that a bubble in gold prices has developed in recent years, followed by a bear market.
The authors of the review note cite the recovery of the US economy, which will lead to a decrease in stimulus measures, as well as to an increase in interest rates, but also to low inflation rates, as reasons for their predictions. Bank of America Merrill Lynch on Tuesday reduced its outlook on gold prices for this year and next, citing improved economic conditions and an increase in the United States. According to Michael Widmer, metals strategist at Bank of America Merrill Lynch, gold prices have maintained a limited range for several quarters after a multi-year rally. The bank expects obstacles to gold prices to persist in the short term.
Nominal rates are proving to be a special drag on investment demand in the metal, since they would increase the cost of storing gold. Improved economic conditions would also raise doubts about the attractiveness of metal as a safe haven. At the same time, significant production gaps in many countries prevented a significant upturn in inflation and inflation expectations in the current phase of recovery. According to the report, the recovery in the U.S.
,. The economy is gaining momentum and some of the US. Goldman Sachs was also surprised by the latest drop in gold ETF stocks, which would contrast sharply with its hypothesis that ETF positions were probably due to longer-term allocation rather than short-term trading. According to the Goldman report, its “economists” believe that the downside risks of their forecasts have decreased, while uncertainty about the size of the QE3 is high.
We believe that there has been a change in recent months and that the conviction to hold gold has diminished rapidly. The lowest average price of gold predicted by taxpayers to the survey was 1,600 U.S. dollars. Estimated dollars by Rene Hochreiter of Allan Hochreiter Ltd and Eddie Nagao of Sumitomo Corporation.
The highest price: 1,900 US dollars. Dollars: was predicted by Joni Teves of UBS, followed by an average gold price of 1,895 US dollars. Dollars forecast by Bart Melek of TD Securities. More details about the survey can be found on the LBMA website.
If your central macroeconomic argument, according to which the acute phase of the global crisis is likely to be over and growth will slowly improve during the second half of the year, proves correct, the relative attractiveness of gold would be “likely to diminish as scary operations fade away.”. The reasons given in the note are the weakness of the US dollar, central bank purchases, demand for ETFs and the recovery in Indian demand. Goldman Sachs expects the price of gold to be driven by “the opposing forces” of greater flexibilization of the Federal Reserve and a gradual increase in real interest rates in the better United States and the United States. According to its expanded modeling, the improvement of the U.
The growth outlook is likely to outweigh a further expansion of the Fed's balance sheet. The bank added that it was difficult to declare a price spike due to high risks to its growth prospects, particularly with regard to the fiscal cliff. You can find the full Reuters article here. The most important factor in prices is expected to be the extremely flexible monetary policy of central banks, which would undermine the value of currencies.
In addition, the debt crisis in the euro area and the geopolitical risks in the Middle East are considered to be important factors for a sustained demand for gold as a “safe haven”. According to the bank, policy makers seem determined to find the least painful solutions to debt problems. This would likely entail reducing the debt burden by devaluing it, which would likely result in creditors becoming even more diversified and leaving aside fiat assets. More than half of the conference participants expect another round of quantitative easing in the U.S.
And 56% forecast that China's economy will grow by 7 to 8% next year. The recovery, inefficient mining production in South Africa and the open nature of quantitative easing drive the rise in the price of gold. According to Deutsche Bank, due to the announcement of an open quantitative easing program by the Federal Reserve, the increase in the price of gold is only a matter of time. Find the best option for buying and storing gold.
Gold is now retreating from its highs, but it could be forming a bullish flag pattern that could cause prices to soar much higher. Generally speaking, investors flock to gold as a stable store of value when currencies and other monetary instruments are no longer reliable. It's important to remember that financial markets are still extremely volatile, making it difficult to predict gold prices over a short period of time and even more difficult to provide longer-term forecasts. The Treasury and the stock markets responded well to this, and investors sold their gold, as the Federal Reserve's promise to deal with inflation was taken seriously.
Therefore, at a time when inflation remains high for a longer period, gold becomes a tool to protect against inflationary conditions. Goldman Sachs precious metals analysts assume in a study that the price of gold will continue to rise next year due to economic and financial uncertainties. This is mainly due to the strength of the US dollar and the increase in US interest rates, which would generally lead to a decline in demand for investment gold. Of course, gold is also consumed as jewelry, and there are large increases in demand even by world governments, which seek gold as a store of value that they hold in central banks.
Analysts at the US investment bank Goldman Sachs forecast a sharp rise in the price of gold this year. The policy of quantitative easing is in full swing in some of the largest economies in the world and this is good news for gold, since savings are ignored when it comes to the dollar and a new means of saving, such as gold, is needed. The reason for the current fall in the price of the precious metal is the surprisingly positive data from the U. .