Gold prices are up 0.4% today, moving above $1787, having climbed more than 17.8% since the beginning of the year and more than 3.3% month on month. Still, analysts believe the precious metal price will rise in the short term as in the long term.
How high can the gold price go in the short term ?
‘We have seen another leg higher for the gold in early trading, building on the gains made over the past week’, explains Chris Beauchamp, chief market analyst at IG in his last analysis.
‘The dip to $1750 provided a brief but, as it turns out, strong entry point, powering the price to its highest levels since 2012. This uptrend is still firmly intact, and we are not yet seeing the kind of lower highs and lower lows that would suggest a near-term pullback is at hand’.
On a fundamental side, ‘the charts are giving a good indication of what is going on in the real world. We do see gold to break out over $1800 an once’, said last week John Meyer from SP Angel to IG TV’s Jeremy Naylor.
‘Commodities trading hedge funds are positioning for this bullish trend’, which is based on ‘a combination of weak dollar, problems with gold mines due to lockdowns and Covid-19 issues’, he added.
Gold Mines are currently encountering disruptions in their production, ‘particularly in Latin America which has been hit very hard by the virus (Brazil, Chili, Peru), and on the other hand, we have got an awful lot of new money printing going on in the world with expectations for high inflation in some areas’, observed John Meyer. In this condition, as the demand for gold remains strong and the offer is weakened, gold price will likely to keep increasing within the next few weeks.
What is the gold price forecast for the end of the year and beyond ?
A bandwagon of observers have also made bullish price forecasts in the long term, as concerns of recession, coronavirus uncertainties, the huge expansion of central bank liquidity and the explosion of government debt will continue to boost gold’s attraction as a safe haven asset.
Citi analysts have raised their projections on gold. Their three-month gold price forecast increased to $1825 per ounce, against a $1715 prediction for the second half of 2020 at the end of May.
The bank is expecting gold price to break above $2000 in 2021, whereas historical gold’s record price is $1921 reached in September 2011.
Goldman Sachs shares the same bullish stance, expecting the precious metal to reach $2000 an ounce in the medium term.
Earlier this month, Dan Popescu, investment research consultant and gold and silver analyst, said to IG TV he believes that in the next five years gold price could break above $5000.
How to trade commodities with IG
Looking to trade the gold and other commodities? Open a live or demo account with IG and buy (long) or sell (short) shares using derivatives like CFDs and spread bets in a few easy steps:
- Create an IG trading account or log in to your existing account
- Enter ‘Spot Gold’ in the search bar and select it
- Choose your position size
- Click on ‘buy’ or ‘sell’ in the deal ticket
- Confirm the trade