22 Apr Bank of America predicts gold price to reach $,3000 per ounce
An imminent global economic downturn brought on by the COVID-19 (coronavirus) pandemic will push the value of gold to US$3,000 per ounce by October 2021, Bank of America has projected.
The firm’s analysts lifted their 18-month price target for the precious metal from $2,000 per ounce to an unprecedented $3,000 per ounce – what would be the highest ever price for gold in trading history.
After an initial sell-off and subsequent rebound, gold has reached its highest level in eight years this month, trading at highs of over $1,700 per ounce. However, Bank of America reckons potent easing policies around the world will send the safe haven asset 50% higher than its all-time record.
“As economic output contracts sharply, fiscal outlays surge, and central bank balance sheets double, fiat currencies could come under pressure,” analysts including Michael Widmer and Francisco Blanch said in the report. “Investors will aim for gold.”
The average gold price in 2020 will reach $1,695 per ounce, the analysts added, before the onset of a worldwide recession and soaring demand for gold pushes the average price to $2,063 the following year.
However, Bank of America noted that gold rallies could be halted if some calm returns to financial markets and the US dollar strengthens. Weaker jewellery demand in India and China could also drag on the gold price.