Julius Baer lifted its gold price forecasts, saying the yellow metal’s rally remains underpinned by a solid fundamental backdrop and ongoing central bank buying that could last another three to five years.
Spot XAU/USD prices crossed the $4,000 per ounce mark on Tuesday, up more than 50% since the start of the year and on track for its best annual performance since 1979.
“While the past two weeks’ performance feels a lot like ‘the trend is your friend’, we still see a favourable fundamental backdrop,” said Carsten Menke, Head of Next Generation Research at Julius Baer.
The bank raised its three- and 12-month price targets to $4,150 and $4,500 per ounce respectively, maintaining its “Constructive” view on gold. Silver targets were also lifted to $50 and $54 per ounce, with a similarly positive outlook.
Menke said the rally has been supported by a cooling U.S. economy, lower interest rate prospects, and a weaker dollar, which continue to draw safe-haven demand.
He added that structural central bank accumulation remains a key driver as emerging markets seek to diversify away from the dollar.
“Assuming a target gold allocation of 20% to 25%, in line with the global average, buying should continue for another three to five years according to our analysis,” Menke wrote.
While acknowledging the risk of a temporary pullback after sharp recent gains, Julius Baer sees little chance of a major correction. “We see a very limited likelihood of a major correction but believe that a temporary setback might occur due to the bullish market mood,” Menke said.
The bank added that any such pause would likely prove short-lived, given the favorable macro backdrop and the continued strength of institutional and central bank demand.
Source :
https://www.investing.com/news/commodities-news/julius-baer-lifts-gold-target-to-4500-sees-cb-buying-lasting-up-to-five-years-4276542
