The US investment bank, Citigroup has announced its latest predictions for gold with its expectations strongly in favour of major price gains. Its analysts say gold is now set to reach $1700 over the course of the next 6 to 12 months, with $2000 forecast in 12 to 24 months.
The bank’s analyst, Aakash Doshi said Wednesday that gold will become an even more favoured safe haven asset over the coming months, helping to prolong the bull run. The analyst said, “Gold should perform as a convex macro asset market hedge, resilient during ongoing risk market rallies but a better hedge during sell-offs and vol spikes.
“With STIR [short-term interest rate] markets pricing in ~1.5 Fed cuts in 2020 and global growth risks skewed to the downside, gold is a direct beneficiary of the low nominal and negative real yield environment.
“[gold could] outperform on a risk market unwind should coronavirus risks impact supply chains and thus US earnings momentum.”
Investment expert Frank Holmes, who is CEO of US Global Investors concurs saying, “It is nothing when gold is $1600 to rally to 20% from here. That takes it to $1900… all of Europe is negative interest rates to try to spur activity. The 10-year government bond is close to an all-time low… I think gold always rallies when rates start collapsing like they are globally [right now].”
According to the Citigroup update, investors are becoming warrier and concerns are being raised about the market position within the business cycle – which could suggest further rate cuts and economic slowdowns are on the way. The update also cites the fact that 2020 is a US election year and the US-China trade agreement uncertainties as both also being favourable to gold prices through the course of the year.
With the bank expecting investors to increasingly favour gold to lower risk and all the signs pointing to an extended bull run with significant price gains on the close horizon, it’s very clear that now is an opportune moment to buy.