Gold Will Rise to $2,200 by the End of the Year

According to ANZ, Australia and New Zealand Banking Group, a fiscal stimulus package from the United States will trigger a rebound in gold prices. They forecast that the precious metal will rise to $2,200 by the end of the year and advance to 2,300 early 2021.

Strategists from the ANZ think that the approval of a US aid package will trigger price hikes. 

ANZ’s forecast for the precious metal calls for gold to rise to $2,200 by the end of the year. And then further to $2,300 early next year.

The outlook for gold is positive amid growing economic concerns due to Covid-19 surges. The accommodative central bank policies and liquidity injections are widely supporting the market, strategists say.

Physical demand is also projected to pick up before the festival season.

• Check-out Financebrokerage’s Comprehensive Review on Spreadex

Gold price pullback is temporary

In the short term, uncertainty over the stimulus package and the stronger US dollar has been weighing on gold, strategists said. Meanwhile, they noted that this pressure is likely to be only temporary.

The recent strength of the US dollar triggered the earnings reserve in gold. The strategists see the backdrop as supportive, and the current price pullback is likely to be short-lived.

The outlook for gold will remain optimistic, heading into the elections in light of political uncertainty, rising coronavirus cases and the low-interest-rate environment, the strategists added.

Gold remains well supported ahead of the US elections amid the high level of political uncertainty. This has already seen a sharp rise in ETF inflows. Gold-backed ETFs have seen six consecutive days of net inflows and are now up 34% this year alone.

However, the $2,300 an ounce level, which is expected to be reached in the first quarter of next year, will likely mark a peak in gold’s rally next year.

ANZ said that in the second quarter of 2021, gold is likely to start declining. First, it will reach 2,100 in June 2021. Following that it will drop to $2,000 in September 2021, and then to $1,900 in December 2021. In early 2022, the bank predicts the price of gold at just $1,675 an ounce.

ANZ projects a price of silver to be around $30 an ounce for the beginning of 2021. However, like gold, silver is expected to begin its decline in the second quarter of 2021. The white metal is likely to end next year at $23.80, according to statements made by the Australian and New Zealand Banking Group.