XAU/USD: Higher average gold prices seem likely – CitiBank


Analysts at Citibank forecast gold (XAU/USD) at $1700/oz in a 1-3 month horizon and at $1900/oz in 6 to 12 months. 

Key Quotes:

“Fed member mentions that the SME lending program may still take a couple of weeks to start, leading to tight onshore US dollar liquidity, favoring the US dollar and dragging down gold. However, nonfarm payrolls fell by 701K in March and the unemployment rate rose to 4.4%, which was worse than expectations. Money flowed into gold for risk aversion and limited the decline of gold price.”

“Gold/USD may rise toward 1704 upon consolidation, with pivot supports at 1536 and 1553.

“We think higher average gold prices seem likely with US policy rates now at the ZLB and extraordinary monetary stimulus across the G3. There is also $10Tn of negative yielding debt outstanding globally, unlike in 2008, which may reduce the opportunity cost of holding gold.”


 

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