Rally in the gold market in recent weeks will lead to a record increase in the price of metal.
What Bank of America analysts said.
The precious metal has grown by 17% since the beginning of 2020, according to Markets Insider. Investors increasingly prefer gold in the context of the coronavirus pandemic, which has plunged the global economy into a long recession. According to Bank of America, the price of the metal will exceed $ 1,900 per ounce by the end of this year.
If investors continue to invest in gold as a safe asset, its value will continue to rise.
“In our opinion, the price of gold can reach a historic high in the third quarter of 2020,” said Paul Siana, technical strategist at Bank of America.
Despite the fact that the price of the metal declined during March, it was one of the first assets that was able to compensate for what was lost this year. The sharp rally in April slowed down and became the beginning of the dominance of a “bullish trend in the gold market.
In May and June, the price of the metal was somewhat unstable – it rose or fell sharply. Today, gold is trading at around $ 1,770 an ounce. The next test for the metal is to reach the value of $ 1800 per ounce.
Gold is in third place among the most popular assets in which investors invest. The metal is inferior to 10-year treasury bonds and options included in the S&P 500 index.
According to a Bank of America study, gold is the fourth largest trader, losing to treasury bonds, cash and technology stocks.
Paul Xian predicts an increase in demand for gold in the coming months. The Bank of America strategist believes that almost zero interest rates and the risks associated with a slow economic recovery due to COVID-19, will increase the attractiveness of the precious metal.
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