Gold forecast to hit $3,000 to $5,000 an ounce
Dubai: The bullion proved to be a lucrative asset class when it rallied substantially last month, reaching its highest level since the global recession in 2008, after the controversial Brexit vote. Although signs became apparent over the last few days that the rally started to ease, the yellow metal again moved higher on Friday when reports of a Turkish coup attempt broke out.
With all the turmoil in the world, gold is seen to continue doing well this year and over the next few years. By the end of 2016, the precious metal could reach $1,500 and by 2020, signs point to the metal hitting a new record high in excess of $3,000 per ounce.
“That gold has held up is a good sign and vouches well for further increases,” says Rolf Schneebeli, CEO of Gold Services AG. “There is certainly a good chance that gold reaches $1,500 by year end, but we need to see the current positive trend to be confirmed. And it will certainly be a volatile development.”
“On the $5,000 an ounce by 2020, I am quite positive. It might be anywhere between $3,000 and $5,000, but it will certainly be substantially higher as now. All the latest developments in the world point to a prolonged low interest environment which means that the inflationary potential built up in terms of liquidity in the monetary system will not be reduced,” he adds.
Schneebeli’s price forecasts merely echoed the analysis made by industry experts recently. In its earlier report, Merrill Lynch said that gold is headed for $1,500 an ounce this year.
“The world has been walking from crisis to crisis and we see risks that this may not change,” the bank said in its report.
“We reinforce our bullish view particularly on gold and silver, which should continue to perform well given subdued global growth and risks that this will skew the public debate towards wealth generation/distribution, populism and migration, with all the negative consequences this may have on effective economic policy making.”
Gold’s continued positive performance this year can be attributed to the UK’s majority decision to leave the European Union, coupled with renewed doubts about the banking sector and the Turkish crisis.
“For the short term, the factors driving the price are again the fears about the Brexit, renewed doubts about the banking sector (this time Italy) and on a very short term basis, the situation in Turkey,” Schneebeli explains.
ABN Amro’s short-term analysis, however, is more modest, citing that gold is expected to average only about $1,350 an ounce by the fourth quarter of the year.
Related Posts