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Abstract:Monetary authorities are spending trillions of dollars to keep economies stable, creating a perfect situation for gold to rally, the analysts said.
Gold will rally 80% over the next 18 months as central bank stimulus and economic turmoil drives record interest, Bank of America forecast in a Monday note.Monetary authorities are spending trillions of dollars to keep economies above water. The widespread spending will place incredible pressure on currencies, the bank's analysts said, in turn pushing investors to gold and its scarcity.There's still plenty of room for investors to pile into the metal, the bank added. Positioning “has been surprisingly weak” even after gold's late March rally, and a massive influx of capital will send prices soaring through the year.Watch gold trade live here.Central banks' stimulus frenzy amid the coronavirus pandemic will drive gold to a lofty record by October 2021, Bank of America projected in a note.
The firm's analysts lifted their 18-month price target for the precious metal to $3,000 per ounce from $2,000 on Monday, praising gold as “the ultimate store of value” amid the severe economic downturn. After an initial sell-off and subsequent rebound, the safe-haven asset sits near its highest level in eight years, but Bank of America reckons potent easing policies around the world will send its value 50% higher than its all-time record.With an official recession looming, monetary authorities are poised to buy record amounts of financial assets and double the sizes of their balance sheets, the firm said. In March alone, G-7 central banks bought up nearly $1.4 trillion of assets to calm roiled markets. The policies will place outsized pressure on currencies, and, in turn, drive massive interest in gold and its scarcity.“Beyond traditional gold supply and demand fundamentals, financial repression is back on an extraordinary scale,” the team led by Michael Widmer said.Read more: An expert at Boyar Research lays out the Warren Buffett-inspired investing approach that's helped the firm crush the market for 7 years — and offers 4 stock picks for a coronavirus-battered marketThe average gold price in 2020 will reach $1,695 per ounce, the analysts added, before soaring demand pushes it to $2,063 the following year.
Gold traded at $1,670.73 per ounce as of 1:30 p.m. ET Tuesday, up 12% year-to-date.There's also plenty of room for investors to pile into the metal, Bank of America said. Positioning “has been surprisingly weak” despite a rally through late March, and momentum investors “are only slightly long gold,” the analysts wrote. Though prices have rebounded spectacularly, the bank's model suggests most capital has yet to follow the trend and rush into the asset.Even if the metal is set to double in 18 months, challenges remain. The US dollar's strength can bite into gold's relative value, as will a downtrend in stock market volatility, the bank said. Demand will struggle to catch up in emerging markets as well, with jewelry demand set to plummet as consumers save cash. Even when the global economy recovers, weakened purchasing power in India and China will maintain pressure on the metal, the analysts added.Now read more markets coverage from Markets Insider and Business Insider:Dow tumbles 600 points as oil's historic plunge worsens
A popular $3.7 billion oil ETF plunges 20% as crude prices hit historic lowsGoldman Sachs talked to more than 100 investors about the historic oil market meltdown. Here are their top 5 questions — and what the firm thinks about each one, from dividends to the prospects for oil stocks.
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Movements in one sector often ripple through others. This dynamic is especially true in forex trading, where fluctuations heavily influence currency values in commodity markets, particularly oil and gold.
In the current financial climate, the importance of gold and silver as safe-haven assets is becoming increasingly evident. The surge in gold prices and the potential rise in silver prices offer new investment opportunities for investors. As global economic uncertainty increases, along with rising geopolitical risks, the appeal of gold and silver may be further enhanced. Investors should closely monitor market dynamics and seize investment opportunities to preserve and increase the value of their
Spot gold continued its record-breaking rally as investors gained confidence that the Federal Reserve might cut interest rates in September and gold ETF purchases improved. The U.S. market hit a record high of $2,531.6 per ounce
Boosted by the weakening of the US dollar and the expectation of an imminent rate cut by the Federal Reserve, spot gold broke through $2,500/ounce, setting a new record high. It finally closed up 2.08% at $2,507.7/ounce. Spot silver finally closed up 2.31% at $29.02/ounce.