The German bank, Commerzbank has been bullish on gold throughout 2020 and doesn’t foresee its position changing next year according to the bank’s analysts, who have issued a very upbeat price forecast for the precious metal which will see it continuing to make substantial gains over the next 12 months.
Noting that gold has gained 23% since March alone, the bank expects fallout from the pandemic to continue well into next year, putting gold firmly in the driving seat for investors. The bank said that a price around £1,701 ($2,300) is expected by quarter four thanks to continuing favourable monetary policy and economic stimulus.
In the bullish briefing note, Commerzbank’s analysts explained, “We do not expect a change in the ultra-expansionary monetary and fiscal policy despite the upcoming vaccinations. Instead, governments and central banks will continue to be required to cushion the negative effects of anti-corona measures on the economy and society. If the necessary fiscal stimulus measures are not adopted in time due to resistance in the legislative process, pressure on central banks to step into the breach with further easing measures would increase.
“Even if, as we expect, the corona pandemic can be brought largely under control in the second half of 2021 through sufficient immunization of the population, the enormously increased public debt levels caused by the corona policy and the inflated balance sheets of central banks will remain in place for a long time to come. The arguments in favour of gold have not changed for the central banks at all. The US dollar-denominated bonds held in the foreign exchange reserves hardly generate any positive nominal yields; in fact, the real interest rate on these bonds is almost entirely negative. The euro-denominated bonds even have a negative nominal yield. The price development of gold in this challenging year has also shown that gold offers great advantages as an integral part of foreign exchange reserves.”
With the bank confident that it is just a matter of time before we hit new highs, act quickly and buy now to be in a position to benefit.