The firm has raised its gold forecast to $1,800 throughout its outlook horizon, up from $1700-1750 at the end of Q2 and the end of Q3, and up from $1,650 at the end of Q4; pointing to the Fed announcement ultimate week because of the main purpose for the shift in outlook.
“For us, this is the Fed throwing the whole lot and the kitchen sink into the economy. The most important determinants of the gold rate are actual US interest prices and expectations for the purchasing power of the US dollar, each inverse relationships, and we reiterate our poor views on each at this point.
Led through Fed easing, we now assume real US hobby costs to dip deeper into the poor territory and perhaps even check the post-GFC lows. Also, the forces behind a capability debasement of the US greenback have intensified.
We live long gold, a trade we initiated in mid-May 2019. Investors may want to also promote gold’s downside price dangers for a premium.”
Adding that while the deflationary effect of the coronavirus disaster has been a headwind for gold, this trend ought to opposite in 2H 2020 as policy responses with the aid of governments and valuable banks gather similarly traction.