The year 2020 has seen its fair share of wild price fluctuations across all markets. Especially where the gold price is concerned, it seems as if things have only just begun to shift in a new direction. According to Goldman Sachs, things will certainly get very interesting in the next 12 months.
A Bold Claim by Goldman Sachs
Banks and other financial institutions usually aren’t the ones to offer bullish optimism on precious metals. This year has proven very different, both out of necessity and simply because the momentum cannot be denied. Gold and silver have become the key assets to watch throughout 2020 and 2021. If analysts are to be believed, there will be ample price momentum to look forward to.
Goldman Sachs analysts recently shared their outlook on the gold market. Forecasting a bullish gold trend is remarkable, but necessary given the current circumstances. That being said, that prediction of reaching $2,000 per ounce by 2021 is not as outlandish as one may think. It is a bit more conservative compared to other predictions, but that is not necessarily a bad thing.
Several factors contribute to this Goldman Sachs prediction. First up are the low real interest rates, which have been a plague in finance for a while now. This is not an issue native to just one country or continent either. Globally, interest rates are in the gutter, and they will likely keep drifting lower as time progresses.
Secondly, the currency debasement concerns are a real problem. A debasement will not occur overnight, but simply the mere idea of doing so will trigger a growing interest in safe-haven assets. When a debasement occurs, currencies will lose value. Once the US Dollar starts to slip, the rest of the world will follow suit fairly quickly.
Throughout early 2020, gold has remained one of the strongest performing assets on the market. Despite a steep dip, the “fear-driven” demand for this precious allowed it to recover value relatively quickly. The same applies to silver, as it has a pretty stellar 2020 so far as well.
Banks Advocate Gold and Silver
This recent prediction by Goldman Sachs is curious. It seems as if the bank has followed the lead of Bank of America. Not too long ago, BoA analysts claimed how gold will hit $3,000 per ounce in the next 18 months. For that vision to come true, hitting $2,000 per ounce will be an important first step.
As a result of this prediction, GS adjusted its gold price forecasts. Within six months, they expect gold to hit $1,900. In terms of its silver forecast, a price target of $21 in six months from now is not unlikely. It will be a very interesting second half of 2020 for those who invested in precious metals or plan to do so in the near future.