Bank of America commodity analysts just keep getting more bullish on gold as the weeks go by.
The bank said in a report last week that gold ’s technical momentum could drive prices to an all-time high this year; in a new report published Tuesday, analysts have officially increased their bullish outlook, saying that gold prices could hit $3,000 within 18 months, a 50% increase from its previous forecast
Along with increasing its 18-month target, the bank said that it sees gold prices averaging $2,063 an ounce in 2021.
“As economic output contracts sharply, fiscal outlays surge, and central bank balance sheets double, fiat currencies could come under pressure. And investors will aim for gold,” the analysts said.
Although a strong U.S. dollar and weak physical jewelry demand in Asia could be headwinds for the gold market, the analysts said that the Federal Reserve has provided enough momentum to propel investment demand and prices higher.
Economists at Bank of America have warned that the Federal Reserve’s balance sheet as a percentage of GDP could rise 20% to 40% this year. According to reports last week, the Federal Reserve’s balance sheet hit a record high of $6.42 trillion, up more than 50% from levels reported during the first week of March.
The analysts noted that the Federal Reserve: “Can’t print gold.”
GOLD LONG (Buy)
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