Canadian investment bank, TD Securities has added its voice to expectations that gold is at the onset of a sustained bull run after revising its forecast upwards for the precious metal. Earlier this week (as we reported in our midweek bulletin), the investment bank B. Riley FBR upped its own projections, saying that “Due to our conviction in rising gold prices, we are meaningfully raising our gold price deck … to $2,500/oz in 3Q20 … and we feel compelled to align our 12-month price targets to this view.”
TD Securities analysts have taken a similar view in light of gold prices escalating as high as $1700 this week, with an expectation for a short term move to $1800 followed by solid trading around the $2000 mark into next year. Bart Melek, who is TD Securities’ head of global strategy said, “Normalizing liquidity conditions, negative real rates, low cost of carry and concerns surrounding fiat currency debasement, not unlike those present during the post-GFC period, likely mean gold price could move toward $1,800/oz in the not too distant future. A move toward $2,000 is also a distinct possibility into 2021, as the global economy normalizes, monetary contentions remain loose while fiscal deficits surge.
“After declining for some two weeks … the metal is seeing a resurgence as the pressure to grow dollar positions eases. Once the funding stresses that drove prices lower are alleviated further, as the Fed and other key central banks monetize COVID-19 related market disfunctions and major governments spend trillions of borrowed money to fortify stressed households and corporates … investors are likely to continue to pivot their focus towards gold.
“Once the COVID-19 economic crisis is well defined and health issues are mitigated, the economy should have a good base to perform well. Negative interest rates will likely be the order of the day for a long time, which make gold relatively cheap to hold. And, since and it is nobody’s liability, which is quite opposite to government paper which will be issued to support all the spending needed by the trillions to fund the various stability programs throughout the G7, gold has a clear path towards $2,000/oz.”
Buy now to capitalise on what looks set to be a sustained period of strong, stable gold prices.