Editor’s Note: Catch up in minutes with a quick summary of today’s must-read news stories and expert opinions that move precious metals and financial markets. Register here!
According to Goldman Sachs commodity analysts, ‘Kitco News) – The US dollar is pushing for a new downtrend due to rising inflation, rising government debt and concerns.
In a report on Tuesday, analysts at the financial firm reiterated their view that gold would be the currency of last resort; He also raised his forecast for precious metals.
The bank is now forecasting gold prices to rise to $ 2,300 per ounce within 12 months and silver prices to $ 30 an ounce from previous forecasts of $ 30 and $ 2000 respectively. The gold market has slowed slightly following a historically new all-time high of incoming comments. August gold futures were trading at $ 1,932.60 an ounce, relatively unchanged on this day.
Analysts see the potential for high inflation as governments destroy their currencies to deal with the debt burden. The bank’s gold forecast is also in line with inflation expectations of five-year treasury inflation protection securities (TIPS) falling to -2%.
Analysts said “the continued decline in real interest rates against nominal rates by the US Fed led to a drop in inflation, which would be seen as environmentally deflationary.” “The irony is that the greater the risk that policymakers must disregard today, the greater the risk of debt and future inflation.
Although gold is not a great hedge against inflation compared to other commodities such as oil and base metals, Goldman Sachs analysts said it is the best asset in the current environment as it appears that inflation will be driven by currency deviations.
“When discussing the drivers of investment demand for gold and commodities, it is important to distinguish between debris and inflation. Analysts say the major debate and debt accumulation mitigate future inflation risks despite today’s inflationary risks.
Goldman expects investment demand in developed markets (DMs) to keep prices up. Although physical demand in emerging markets (EM) will decline, they said they expect it to eventually pick up from lower levels.
Analysts said, “There is opposition to ejecting EM consumers from the market.” “We probably see this demand when the price stabilizes somewhat and DM investment purchases slow down, creating more room for EM consumers. We feel that for now, investors should not be concerned with the weak EM demand print. “
The bank is at $ 30 an ounce level next year. Analysts said they expect higher gold prices and the silver to gold ratio has fallen in line with historical norms as industrial demand improves.
Disclaimer: The views expressed in this article are those of the author and may not reflect any of them. Kitco Metals Inc The author has made every effort to ensure the accuracy of the information provided; However, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is for informational purposes only. It is not an insistence on any exchange in goods, securities or other financial instruments. Kitco Metals Inc. and the author of this article plead not guilty to damages and / or damages resulting from the use of this publication.