"Perfect upswing" for gold: Goldman Sachs analyst expects gold price of 2,500 US dollars

• Demand for gold is likely to increase
• Gold ETFs are expanding holdings
• Goldman Sachs with a bullish price target

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Goldman Sachs analyst sees ‘perfect bounce’ for gold prices

Among investors, gold is still considered a safe haven in uncertain times. The precious metal is also often used to hedge against inflation. With increasing price pressure and the war in Ukraine, the “currency of last resort,” as analysts at the major US bank Goldman Sachs call the commodity, is apparently more in demand than ever. “It’s a perfect upswing for gold at the moment,” Jeff Currie, head of commodities at the finance house, recently told Bloomberg Markets.

According to the strategist, there are many reasons for the expected rally. “Firstly, there is real investor demand for gold due to inflationary fears and recessionary downturns in countries in Europe,” Currie told the news agency. Gold ETFs would also increase their holdings for the first time since 2020, as the online portal “Cash” reports with reference to the major bank. An even faster dynamic in this area is to be expected, since the market has not yet priced in the slower growth in the USA, but this is the only way to control inflation. Commerzbank analyst Daniel Briesemann also confirms this assessment, as “City AM” reports. “Gold is still in high demand as a safe haven, as evidenced by sustained high ETF inflows,” said the strategist.

Central banks are also increasingly asking for gold

But Currie also sees a significant increase in demand from central banks, triggered by geopolitical uncertainties and for hedging through diversification. In particular, the Russian central bank, which has been slowed down by sanctions from western countries, is likely to buy more here, since the institution holds reserves in US dollars and euros, with which it cannot do anything except invest in gold, the analyst told Bloomberg. “And then there are central banks in countries like China and Turkey that are diversifying for reasons of de-dollarization. And then there are diversification reasons in countries like Brazil and India,” the analyst continued. “So demand from central banks has risen to about 750 tons this year, which is a new record.”

consumer demand increases

“Finally, don’t forget the physical demand for gold, particularly from places like China and India,” Currie said. A clear trend could already be seen here in the fourth quarter of 2021, which, according to the major bank, is also related to the economic recovery in Asia.

Gold price soon at 2,500 US dollars?

“When you add it all up, it’s the strongest demand we’ve seen across all three channels,” Currie said in an interview. A similarly strong demand, emanating from all important drivers, had previously been observed between 2010 and 2011. During this period, the price of gold rose by 70 percent. The expert is therefore again assuming an imminent increase. Within the next three months, the price could jump to 2,300 US dollars per troy ounce, in six months it should even be 2,500 US dollars. For March 2023, Currie also predicts a price of $2,500. If the big bank is correct in its assessment, the price of gold will soon surpass its record high from the summer of 2020. A few months after the Corona crash in spring 2020, investors increasingly sought out the yellow metal and drove the price up to USD 2,075, higher than ever before.

Since the beginning of the year, the gold price has already risen by 3.7 percent to USD 1,897.60 (as of March 16, 2022).

Editorial office finanzen.net

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