Most Wall Street analysts are a pretty conservative bunch when it comes to predicting the price of gold. Since Wall Street firms can’t make the same money from trading gold that they can from trading stocks, bonds, currencies, and other commodities, they tend to downplay the importance of gold in investment portfolios and predict prices for gold that are lower than they are likely to really be.
Enter the analysts at Commerzbank, who earlier this year predicted that gold would be at $1,350 per ounce by year’s end. Less than a quarter of the way through the year, those analysts have already had to up their predictions, with the expectation that gold will hit $1,400 per ounce by the end of the year. Any bets as to when they’ll next have to increase their predictions?
Gold’s performance this year has defied expectations, as most analysts normally expect gold to decrease in price when stocks make gains. But despite a stock market bull run so far in 2019, gold continues to see good gains. That’s because the underlying economic fundamentals support a further rise in gold. Among the reasons expected for gold’s price increase are:
- An end to the Fed’s rate hikes, with continued easy money proving bullish for gold;
- Continued easing on the part of the European Central Bank;
- Increased demand from China and India;
- Greater investment demand in the United States and Europe.
Short-term demand for gold will undoubtedly be influenced in the next few weeks by the effects of Brexit in the UK. Expect to see the gold price spike as the uncertainties surrounding the UK’s exit lead to turmoil. And don’t forget about central bank buying, which has seen central banks add to their holdings for many months. With all signs pointing to an increase in gold demand around the world, the stage is set for gold investors to see a very profitable 2019.
This article was originally posted on Goldco.
