According to BofA, gold prices could take the $2,500 price tag. The yellow metal needs only a slight increase in investor buying to justify this.
It is possible for gold to reach $2,500 this year!
According to BofA, gold prices are likely to climb to $2,500 this year as central banks continue to buy gold, the de-dollarization trend accelerates and the Federal Reserve halts rate hikes. For this, gold does not need a lot of new investor purchases. In a note Tuesday, commodity strategist BofA underlines:
As a result, non-trade purchases do not need to increase significantly to justify gold reaching $2,500 this year. Entries in ETFs will be critical. In addition, the dynamics in assets under management will be an important indicator confirming whether price increases can be sustained.
rate hike end of cycle gold prices will be critical for
BofA predicts that the Fed’s hike cycle will end soon, despite high inflation. This means that real rates will be less of an obstacle for gold. Based on this, he makes the following assessment:
Affected by the recent banking turmoil, markets are pricing in a rate cut soon. At the same time, core inflation is sticky. For example, increasing price pressures for housing underscore the risk of runoff effects. This confirms our long-held view. So, central banks don’t have a magic wand to fight inflation. That, too, should eventually get investors back into the market. The end of the rate hike cycle will be critical for gold prices.
De-dollarization trend accelerates the rise in gold prices
Meanwhile, cryptocoin.comAs you can follow, central banks’ gold purchases continue. In addition to the record amount of gold purchases last year, the trend of de-dollarization is also accelerating the rise in gold prices. Strategists make the following statement on this subject:
Terms of trade, current account balances, and ultimately gold prices are interconnected. Only a handful of central banks are expressing de-dollarization. However, the global economy is now moving towards a multipolar world. For example, news reports that Saudi Arabia is considering pricing oil in CNY reflect this. The proportion of US currency in official foreign exchange reserves has also fallen from around 70% two decades ago to 58% now.
BofA states that Russia, which has become the country with the most sanctions on a global scale, takes the lead in this regard. “The experience of Russia and similar countries in weaponizing the US dollar has prompted central banks to shift some of their assets into gold,” the note states. BofA predicts that gold will rise to $2,200 by the end of the year.
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