The commodities trading department at Goldman Sachs has reiterated its $2,000 gold target. However, not all the analysts at the investment bank are that confident about the yellow metal’s prospects.
Goldman Sachs VP Mikhail Sprogis is optimistic about gold, as shown by the recent commodities trading report: the current target is $2,000 per ounce. This confirms an earlier forecast by the investment bank.
The key factors supporting gold are inflation fears and the recent drop in the Treasury yields. Kitko news reports Sprogis as saying that in the past few months, gold prices correlated strongly with inflation fears, but then corrected rapidly when the Fed announced a lower inflation target. Thus, inflation risks aren’t the main factor influencing investors’ decisions anymore.
Sprogis also said that Goldman Sachs’ basic scenario assumes that the global economy will continue to recover while inflation remains low. In this case, real interest rates will remain discounted and we’ll see limited upside potential for gold as developing countries recover at a moderate pace.
Sprogis also said that in the scenario where global recovery is slower than expected or inflation is significantly higher, gold will have a much higher growth potential, considering that it’s now undervalued and investors haven’t been allocating a lot of capital towards it. The expert believes that gold can be a good strategic buy for portfolio managers wishing to hedge against macro volatility risks.
Finally, according to Business Insider, some Goldman Sachs analysts even expect the price of gold to rise to $2,500 an ounce.
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