In a note published on Tuesday, Bank of America said gold can hit record highs by the end of 2020 if its rally continues to break through key resistance levels.
The breakthrough that is taking place now, ending in the second quarter, is completing an eight-week trading range that has resumed growth, ”writes Paul Siana, technical strategist at Bank of America.
“These models say gold can make a new record in history.” [the second half of 2020] with Q3 on our mind. ”
Xiana said $ 1800 would be the key resistance level to watch out for.
Meanwhile, SGMC Capital Founder and CEO Massimiliano Bondurri told Bloomberg he thinks that by the end of this year gold could reach almost $ 2,000 and could rise due to the weakness of the dollar.
It can rally much further than here, for a number of reasons. First of all, we expect continued devaluation of the dollar, so that it can benefit gold. This uncertainty across the market and economic conditions will simply keep the price of gold as a safe haven. In the end, people will start to worry about inflation. Not now, but probably more in the future. And again, gold is a good barrier to this. Thus, we can very easily see that it is approaching $ 2,000, even by the end of the year, and may even grow even more, because the depreciation of the dollar as soon as it comes … will have a certain path“.
Bondurri also said that there is a serious mismatch between the stock market and the real economy.
The reason for this is the huge monetary and financial incentive that we are experiencing. And therefore, even though the economic indicators will be terrible this year due to the virus, the estimates are likely to remain supported in any case due to the very large amount of monetary and tax incentives, the amount of liquidity that is introduced into the system. And in general, only signals from central banks and governments that they are always ready to do more.“
Bondurri reiterated that the market was “ahead of itself” in terms of valuation.
The time for reckoning with this will come. ”
Edison Investment Research is even more optimistic, arguing that gold could rise to $ 3,000.
In his gold reportEdison Director Charles Gibson wrote that the monetary policy of the Federal Reserve is extremely supportive of gold.
Given that the total monetary base of the United States is now $ 5.1 trillion (and given the close historical correlation between them), it is reasonable to expect the price of gold to rise to $ 1,892 an ounce and possibly reach $ 3,000 an ounce.“
Gibson emphasized the historical correlation between the monetary base and the price of gold.
This is important for the reason that since 1967 the price of gold has shown an extremely strong (0.909) correlation with the general monetary base of the United States. Gibson The more dollars in circulation or maybe the higher the expected price of gold“.
He said the Fed is engaged Cop infinity – in fact, unlimited bond purchase is the limit.
Oddly enough, there is some evidence that the Fed has already spent about $ 2 trillion on bonds, which, all other things being equal, must take the total amount of the USA. the monetary base is up to a record $ 5.5 trillion, and the price of gold is more than $ 2,000 an ounce and potentially up to $ 3,281 an ounce.“.