– Nigel Doolin, Head of Trading at Core Bullion Traders.
At time of writing, gold has just broken through the key $1,800/oz barrier (for the second time this year) as a surge in COVID-19 cases pushed towards further accommodative monetary policy measures and demand for the safe-haven metal. But what is the real price prediction for the gold price? Everyone knows that when times get tough, both in the markets and in politics, gold will historically rise. To-date, although the precious metal has performed well in 2020 amidst this Pandemic, rising to over $1,800/oz twice so far and up over 20% on the start of year price – it may not have hit the heights most would have expected in these conditions. The predictions were thought to be higher.
$3,000 an Ounce?
Bank of America recently predicted an 18-month target for the price of gold to $3,000/oz. So what is the driving force behind that call? Well, things to bear in mind here are – first of all, fiscal policies are lax right now with Governments around the world are throwing money at the Covid-19 Pandemic and then they are monetizing that debt through monetary policy. Bank deposits are growing and investors don’t really know what to do with that money. So this all means that we may (should?) see investors again flocking to gold as a safe haven, driving the price higher. A lot of investors in this situation have moved to gold as opposed to keeping cash in their portfolios. This should follow through with institutional investors as well as private investors.
As gold markets continue to look very bullish, we have seen a major push higher during recent trading. Now that gold is heading towards the $1,825/oz level this shows a clear break out of the previous price barrier. The $1,800/oz level was difficult to get above, but now that we have cleared it, it seems likely that we will continue to see gold be one of the favoured trades by institution and private investors alike. Predicting the price of gold is not an exact science, but most commentators are now predicting that the precious metal price has much further to go, due to a whole plethora of issues that could continue to bring the buyers in.
Longer-term most see the market is probably going towards the $2,000/oz level but that may take a significant amount of time. Having said that, between now and then you can rest assured that I (personally) will be buying every dip as they occur. It feels obvious at this point that the buyers are still in control. Where gold will go long term nobody can say with certainty, but history has shown that, the gold price has continued to rise – with significant dips along the way – the trick is always to ride out those dips and if you can manage to do that – gold should always perform well for you.
Contact us today if you would like to know more. We look forward to dealing with you at Core Bullion Traders.