Gold to trade around $2,100 next year

Gold (XAU/USD) has taken a hit in recent months. After hitting a record high of $2,063/oz in August, the yellow metal has struggled to find another source of lift. However, gold’s outlook remains positive and strategists at ANZ Bank maintain a 12-month target of $2,100/oz.

See:

Gold to move above $2,000 over the next six months – TDS
Gold to end the uptrend on a break of critical $1,800 support – ABN Amro
Gold to rally towards $2300 in 2021 – CIBC

Key quotes

“With the prospects of an imminent coronavirus vaccine, the likelihood of a strong global recovery and a rally in risk assets continues to improve. This could take some shine off gold’s haven appeal. The yellow metal has traditionally been a strong performer during weak economic periods due to its strong defensive characteristics. However, we don’t think this will scuttle gold’s current rise higher.”

“Gold’s main drivers, real interest rates and the US dollar are likely to provide support over the coming year. Using the US Federal Reserve’s forecasts for rates and inflation, real rates should continue to push into negative territory. And a strong global growth pulse should see the USD weaken further.”

“Our gold valuation model suggests gold should trade around $2,100/oz next year, assuming US inflation rises to 1.7%, USD index falls to 90 and yields on 30Y bonds hold steady around 1.6%. That said, we also acknowledge headwinds in the short-term. The continued strength in equity markets is likely to see further investor rotation out of gold-backed ETFs and into equities. We have subsequently cut our 0-3 month target to $1900/oz. However, we maintain our 12-month target of $2,100/oz.”

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.