Goldman Sachs Even Made The Date: The Bomb Gold Forecast Has Arrived!

The investment banking giant raises the price for its gold forecast and offers a long gold trade for the year. It seems that even after a dismal 2021 season, Goldman Sachs is not ready to give up on gold. The Bank’s gold forecasts and valuations cryptocoin.com We have prepared for our readers.

Goldman Sachs believes the long gold position will be more effective

In a report released Thursday, the bank says it raised its 12-month price forecast to $2,150 from the previous target of $2,000. The bank also recommends purchasing December 2022 gold futures. The new bullish outlook comes after a disappointing 2021 for gold as prices ended the year down nearly 4%. Goldman said the decline in gold last year made sense in an environment where economic activity is strong and there are expectations that rising inflation will be temporary. Analysts make the following assessment in the report:

Most importantly, high growth and seemingly stable prices have led to an increase in all assets at risk, especially cryptocurrencies. As a result, gold not only faced falling investment demand from investors seeking value protection, but also faced direct competition with Bitcoin as a store of value. In addition to declining investor interest, divergence in global growth expectations helped bolster the dollar beyond our expectations.

But looking into the new year, Goldman expects much of last year’s trend to reverse. According to analysts, today, the global growth-inflation mix is ​​markedly different. While a recession has yet to be mentioned, bank economists predict a significant slowdown in US growth, while a new walking cycle has led to a risk-free environment in long-term asset classes. Analysts predict:

We believe that a long gold position will be more effective in the current macro environment for investors looking for a way to protect their portfolios from growth-slowing and declining valuation risks.

“Gold forecast: We anticipate $2,500”

Goldman Sachs says that the US Federal Reserve is preparing the markets for a rate hike in March. Analysts emphasize that, contrary to the expectations of many investors, gold remained very resilient during the recent rise in US real interest rates. According to analysts, this is due to gold’s status as both an inflation hedge and a defensive asset.

Analysts note that increased risk, consistently higher inflation will force the Federal Reserve to aggressively tighten monetary policies, which will put more weight on economic growth. Goldman Sachs has already lowered its US growth forecasts, as the US government is unlikely to move forward with its fiscal stimulus plans. Analysts explain the effect of this situation on gold as follows:

As US growth continues to slow in 2022, the market’s perception of the possibility of a recession could increase further. This prepares gold for more investor interest despite rising interest rates.

Another factor Goldman Sachs is monitoring is the threat of rising inflation. Over the past year, inflation fears have been relatively contained as the US central bank sees rising consumer prices as temporary. But the investment bank says there is now a risk of inflation expectations becoming unstable as inflation is more persistent than expected:

If inflation is structurally moved to 4%, we estimate that gold could hit $2,500 based on the historical gold-inflation relationship. Also, if US gold ETFs return to their 2011 highs, we expect gold to be somewhere near this level. Therefore, we think that there is a significant upside potential in a scenario where inflation rises significantly.

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