Gold: To hit $1900 by end-2020, five key reasons – ABN Amro

Analysts at ABN Amro have revised up their gold price-forecasts for 2020 and 2021, citing the following five key reasons.

“1. Central bank policy is a strong driver behind higher gold prices.

Official rates ... In a large number of countries … will unlikely go up in our forecast horizon and quantitative easing

2. Number of countries ... Negative rates.

Gold is not paying any interest rates. So negative rates are another major support to gold prices especially versus the euro.

3. The us may not have negative official rates or government bond yields, but nominal rates corrected for inflation expectations (real rates) are in negative territory.

4. Governments ... Large-scale fiscal stimulus to support the economy.

 as a result, fiscal deficits in a large number of countries have risen substantially, even to double digit numbers. This development has made some investors nervous, especially in combination with the substantial amount of monetary policy stimulus.

5. Technical outlook is positive

Psychological resistance of $1,800 per ounce has been surpassed.

 it seems that investors will only be satisfied if the former peak in gold prices at $1,931 per ounce is reached and taken out.

Above that the important psychological level of $2,000 per ounce is within reach.

Year-end forecast is $1,900 vs. the previous $1,700 while for end of 2021 is $2,000 as against $1800 prior.”