If you have been wondering just how the price of gold could go in these troubled times, you get some indication of market sentiment when one analyst predicts that mark could easily be $1,900. 1
According to Peter Boockvar, chief market analyst of Lindsey Group, when speaking recently on the CNBC “Futures Now” program, “This is just the beginning of a new bull market in the metals…and this is an ideal opportunity for those who have not gotten in.”
Reasons for the Prediction
While the prediction raised some eyebrows, Boockvar provided some substantial insights to back up his bold statement. These include:
- Skepticism concerning further FOMC hikes (proven true for the most recent meeting 2)
- Ongoing central bank action that has produced negative value in trillions of dollars of their nation’s sovereign bonds and instruments
- Historical precedence that even if rates are raised in troubled times like these, gold has still seen substantial price rises
- Continued weaknesses in the value of paper currencies worldwide
Moreover, this prediction was made before the news on the Brexit vote with its current and future impact on worldwide financial markets. The price for August deliveries moved above $1,328, a stunning 5.2 percent increase and hitting a high-water mark set in March of 2014. This market movement repudiated the bet many gold buyers and precious metal traders made that the UK would vote to remain in the European Union.
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Putting Expectations in Context
These and other market news are behind the increasingly bullish predictions by respected analysts such as Boockvar. For example, the precious metals specialist at Natixis, the French investment and bullion bank, Bernard Dahdah believes the market will see at least another 18 percent rise in 2016, reminding us “On the back of difficult and uncertain global markets, gold prices have risen by almost 20% so far this year.” 3
While Dahdah’s prediction is still south of Boockvar’s, he sees a very positive year. He, like Boockvar, points to a number of factors that the market can no longer ignore. It is worth noting that Dahdah won the 2015 London Bullion Market Association forecast survey contest by predicting the average price of gold, getting it spot on.
Dahdah adds his concerns over the developing collapse of the Chinese stock market, the growing role of negative interest rates in central bank actions, and overall global market stress. He gives these as reasons gold will continue to be seen as a safe haven for many gold buyers and investors in the coming months. To these and many gold traders, the rising sentiment is that the time to buy is now.
2 – https://www.federalreserve.gov/newsevents/press/monetary/20160615a.htm
3 – https://www.bullionvault.com/gold-news/gold-price-030820163