Small Caps: Why Investors are Buying Gold

August 9, 2019, By smallcapfirm,

At the moment, gold trades just under $1,500 an ounce.

However, many analysts believe we could see $1,600, even $2,000 gold this year.   For example, Goldman Sachs believes the rally above $1,500 is just the start of a bigger move.  In fact, they believe gold could easily rally to $1,600 over the next six months, given the dimming global economic outlook, fueled by heightening trade tensions between the U.S. and China.

“If growth worries persist, possibly due to a trade war escalation, gold could go even higher, driven by a larger ETF gold allocation from portfolio managers who still continue to under-own gold,” Goldman analysts said, as quoted by Bloomberg.  “Gold ETFs have recently built momentum almost as strong as in 2016, and we believe that can be maintained in the short-term.”

Bank of America Believes we Could See $2,000 Gold

Analysts at Bank of America Merrill Lynch say gold could shoot to $2,000 in the next two years, as “the recent dovish tilt by central banks, accompanied by increases of negative yielding assets,” as also quoted by Bloomberg. UBS Group AG and Citigroup Inc. are also bullish on gold, forecasting prices could rise to as high as $1,600.

Should we see more flare-ups in the trade war, further devaluation of the yuan, or even another decline in the 10-year Treasury, gold could pick up sizable momentum.

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