As gold hits new records, some of the world’s biggest banks offer up new forecasts for the precious metal

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 $US1,942.55 ($2,711.05) 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.

US-China tensions have risen in recent months as China enacted security legislation in Hong Kong and the countries engaged in a blame war over who is responsible for the coronavirus outbreak.

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: $US2000 by September-end

UBS sees gold hitting $US2000 by September-end. Reuters

“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.


Deutsche Bank

Price target: $US2000-$US2100

Deutsche Bank
Deutsche Bank is a little more bullish with its forecast.

“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.”


JP Morgan

Price target: $US2000

JP Morgan
JP Morgan is a little more cautious in its forecast saying it sees “one last hurrah before prices turn lower into year-end”. Reuters

“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 $US2,000/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.


Bank of America

Price target: $US3000 by end of 2021

Bank of America
Bank of America is wagering gold will hit $US3000. Getty Images

“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 $US2000 to $US3000/oz.”

“Still, a strong USD backdrop, falling equity market volatility, and weak jewellery demand in India & China may remain headwinds.”


Goldman Sachs

Price target: $US2,300 by July 2021

Goldman Sachs
Goldman Sachs has raised its 12-month gold and silver price forecasts. Reuters/Lucas Jackson

“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 $US2300/toz and $US30/toz respectively from $US2000/toz and $US22/toz.”


IDB Bank

Price target: $US2000

IDB Bank
IDB Bank says gold will go “another leg higher” thanks to the weakening US dollar. Marcel Mettelsiefen (AFP)

“With gold having broken through the 2011 high of $US1,900, we would expect another leg higher and the price to approach $US2,000. 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.”

This article first appeared on Business Insider Australia, Australia’s most popular business news website. Read the original article. Follow Business Insider on Facebook or Twitter.

The post As gold hits new records, some of the world’s biggest banks offer up new forecasts for the precious metal appeared first on Stockhead.

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