Gold price to surge past $3,000 says Bank of America
The gold price fell back on Tuesday as investors take profits on the best performing financial asset of 2020 — and turmoil on commodity and equity markets continues.
On the Comex market in New York, gold for delivery in June, the most active contract, fell by as much as $49.20 an ounce, or nearly 3% to $1,662.00 an ounce in morning trade, before paring some of those losses.
A week ago, gold futures peaked at $1,788 an ounce, a seven-and-half year high as central banks around the world pumped trillions of stimulus dollars into the financial markets to prop up economies brought to a standstill by the covid-19 pandemic.
Bloomberg says Bank of America raised its 18-month gold price target by a full $1,000 to $3,000 an ounce in a report titled “The Fed can’t print gold.”
That compares to an all-time high just above $1,900 an ounce struck in August 2011 in the aftermath of the global financial crisis.
“As economic output contracts sharply, fiscal outlays surge, and central bank balance sheets double, fiat currencies could come under pressure,” analysts including Michael Widmer and Francisco Blanch said in the report. “Investors will aim for gold.”
The bank expects bullion to average $1,695 an ounce over the course of 2020 and more than $2,000 next year, but warned if some calm returns to financial markets and the dollar strengthens the prediction could prove too optimistic.
Reduced demand for jewellery in India and China could also halt further rallies in the gold price but the bank added that “beyond traditional gold supply and demand fundamentals, financial repression is back on an extraordinary scale.”
Source : mining.com