Given all of the financial turmoil taking place throughout 2020, there have been many predictions as to what will happen once all of this is over. A recent gold price prediction by Bank of America has a lot of people on edge, although in a positive manner.
Gold Remains Very Popular
In times of financial duress, precious metals such as gold tend to become of even more importance than ever before. Investors have shown a great appetite for the world’s leading precious metal, even though it went through a volatile spot by losing nearly $300 in a matter of days.
Most of those losses have been recovered, even though the coronavirus crisis hasn’t diminished all that much. In fact, it has only triggered a bigger decrease in gold production around the globe. At the same time, demand for physical bullion remains rather low, thus one would not expect the gold price to increase all that much.
The markets have shown that that isn’t necessarily the case. Gold recovered nicely to above $1,700 last week. Ever since, it lost a bit of ground again, but that was to be expected.Today, the gold price is still looking healthy after recently surpassing $1,700 for the second time in quick succession.
Bank of America Gold Price Prediction
Big was most people’s surprise when bank of America issued a new gold price forecast. While those forecasts are nothing new, the figures included in it are out of the ordinary. The bank’s current 18-month gold price target sits at $3,000 per troy ounce.
A remarkable figure, for many different reasons. Not only would this result in a new all-time high value, but it is also 50% higher than its current record price. Retaking the $2,000 level appears to be a matter of time these days, but pushing through to $3,000 will require significant effort.
Bank of America highlights several catalysts for this price increase. First of all, there is the ongoing rollout of stimulus packages globally. Central banks keep injecting liquidity into markets, yet fail to make much of an impact.
Moreover, there is the overall decrease in economic output. A sharp decline in this aspect can trigger severe changes. Combined with fiscal outlays and doubling central bank balances, a lot of things can happen throughout 2020. Most of those developments will, seemingly, have a big impact on the gold price.
In its prediction, BoA mentions that the average gold price per ounce for 2020 will even out to $1,695. That same average will rise to $2,063 in 2021. It is not an unlikely outcome either. Gold futures have traded at high values for a while now and still note an 11% increase this year.