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After a new record high: Quo vadis Gold?

The gold price has passed its old record high and almost every major bank believes that the yellow metal will also break the $ 2,000 an ounce mark, Bloomberg reports. But when it comes to the question of how to proceed, there are different opinions.

For example, analysts at JPMorgan Chase & Co say the rally, which has pushed gold 28% higher this year, could lose momentum by the end of the year. The experts from Citigroup and Bank of America Corp, however, do not yet see this. They expect the price of gold to remain high in the longer term, with Bank of America even assuming that gold can rise to USD 3,000 an ounce.

Gold has once again lived up to its role as a safe haven for investors, now that the COVID19 pandemic is plunging the global economy into severe turmoil. Yesterday, Tuesday, the precious metal rose to $ 1,981.27 an ounce, about $ 60 higher than the previous record high of 2011. Falling real interest rates, the weakness of the US dollar, gigantic economic stimulus programs by governments around the world, and the newly sparked disputes between the US and China fired the gold rally.

JP Morgan believes that the gold price will now have one last firework display before it goes down again at the end of the year. Bankers are now neutral on gold and believe that the current price of gold may be near the final high.

Bank of America, on the other hand, takes a completely different approach. The analysts are sticking to their April forecast, which predicts that the price of gold will rise to $ 3,000 an ounce in the next 18 months. Citigroup believes that the current gold price cycle is “unique” and that gold can stay longer at a high level this time.

All of the measures taken by governments and central banks have triggered the old fears that gold continued to hit record highs in 2011, namely that the dollar will collapse and inflation will resurgence. However, this time, according to UBS, monetary policy measures were faster and more massive and it is still unclear how big the effects of the coronavirus crisis will be on global unemployment and economic activity.

In any case, gold should soon rise above USD 2,000 an ounce, Citigroup believes. It raised the short-term target for the gold price to $ 2,100 an ounce. The analysts even believe that gold could rise to $ 2,300 in a bullish scenario in six to 12 months.

Gold could become the “new normal” for UBS at around USD 2,000 and one can also see the possibility that the yellow metal will climb up to USD 2,300. However, the experts at UBS believe that the gold rally could stall in the middle of next year, as central banks could not continue their massive easing measures indefinitely. If the economy rallied, investors would start looking for alternatives to gold.

At Invesco Ltd. Are you of the opinion that gold will rise, but will remain in a trading range for now. A new trigger, such as a rapid rise in infection rates in the United States or another major geopolitical event, was needed to keep the yellow metal rising.

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