Don’t be fooled by this week’s opportunity to buy the dip says one French bank, as it confirms there is a clear path above £1,618 ($2,000) opening up for gold. Société Générale’s latest commodity report paints a very compelling picture for the yellow metal. The bank has raised its price prediction for gold, saying it now expects to see trading to hit a new record high of £1,699 ($2,100) as soon as next quarter.
The bank’s analysts have also revised upwards its expectations for inflation levels, creating a perfect environment for the gold bulls to rush headlong into unchartered territory. Writing in this week’s report, analysts shared, “We expect monetary and fiscal policy to tighten, but not as quickly as inflation. SG economists have revised up their forecasts from 6.6% to 7.6%. This, combined with Fed hikes expected not to keep up, has created the perfect mix of negative real rates for gold. With the U.S. 10-year nominal rates forecasted to average 3.25% in 3Q22 by SG economists, real rates should remain at deeply negative levels in the short term.”
The bank also expects that the war in Ukraine will continue to create favourable conditions for gold, with market volatility driving investors to increase their holdings to bring stability to their portfolio. “While both equities and bonds are crashing, gold is grinding 2.3% higher YTD,” analysts added. “[This is] incentivizing investors to increase their gold holdings to diversify their exposure away from equities/bonds.”
Further underlining its pro-gold stance, Société Générale says that it forecasts a 350-tonne growth in gold-backed ETFs for the year.
With Société Générale confident gold prices are poised to rally to their highest ever levels by a significant margin, don’t miss your chance to take advantage of the window to buy.