The UAE News web report: There are different price brackets but all the major investment banks and gold analysts have consensus that the gold price will go up next year with a range of $1,965 an ounce to $2,300, according to media reports.
Gold prices will break out of a tight trading range and soar through 2021 as the coronavirus recession gives way to higher inflation, stoking demand for the yellow metal, Goldman Sachs said.
Goldman Sachs said that it is maintaining its 2021 gold price target of $2,300 an ounce, implying a 22 per cent rally from current levels over the next 12 months, as the global economy balances between positive news of potential vaccines for the Covid-19 virus and the near-term risks of further economic devastation.
However, Jim Steel, chief precious metals analyst at HSBC, said that gold will average a price of $1,965 an ounce in 2021, owing to “competing macroeconomic forces.”
While accommodative monetary policy will continue to provide tailwinds, an unwinding of geopolitical risk from a Biden Administration will ease the appetite for gold, said Steel.
Steel stressed that the forecast of $1,965 an ounce is an average price target, not a year-end target. “We’re looking for strength in the more early part of the year and maybe more moderation in the second part, but don’t forget that’s an average, which means that the market will likely spend time about $2,000 for some time, and some time under $1,900,” he said.
The gold market’s rally in 2020 has benefited from the global phenomenon of monetary stimulus and low interest rates.
Although Goldman Sachs economists are expecting to see a strong economic recovery in the US and worldwide, commodity analysts Jeffrey Currie and Mikhail Sprogis, the authors of the gold report, said that there is still a “strong strategic case for gold.”
“In our view, the structural bull market for gold is not over and will resume next year as inflation expectations move higher, the US dollar weakens and emerging market. retail demand continues to recover,” the analysts said. “Near term, however, it may be difficult for gold to generate a meaningful momentum in either a higher or lower direction.”
They said that a drop in real five-year yields, indicating a surge in inflation, will drive gold prices higher next year “Under our forecast, short term US real rates will average -2.1 per cent over the next five years. Five-year tips yield is currently -1.2 per cent, which implies material downside potential,” the analysts said.
