A strong strategic case intact, targets $2300 in 2021 – Goldman Sachs

Goldman Sachs commodity analysts Jeffrey Currie and Mikhail Sprogis, said that there is still a “strong strategic case for gold,” in its latest report.

The US investment banking giant maintained its 2021 gold price forecast at $2300.

Key quotes (via Kitco News)

“In our view, the structural bull market for gold is not over and will resume next year as inflation expectations move higher, the U.S. dollar weakens and E.M. retail demand continues to recover.”

“Near term, however, it may be difficult for gold to generate a meaningful momentum in either a higher or lower direction.”

“Under our economist forecast (assuming our bullish oil forecast) short-term U.S. real rates will average -2.1% over the next five years. Five-year tips yield is currently -1.2%, which implies material downside potential.”

“We believe the bulk of gold purchases which happened this year were made by investors who were more concerned about the real purchasing power of the dollar vs. losses in their equity portfolios,”

“Chinese and Indian gold demand already displays signs of normalization. The Chinese and Indian gold premiums are gradually increasing and are almost back to pre-Covid levels. Biden’s election win and vaccine news should continue to push currencies of E.M. consumers higher as tariff risks are lower, supporting their purchasing power.” 

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