Gold could hit $1,400 by year end says new report

Despite reaching an eight-week low over concern about upcoming monetary policy, the gold price could still reach $1,400 by the end of December, according to analysts at Bank of America Merrill Lynch. They believe that, as inflation continues to be low, this will cast doubt on the potential for future rate hikes, and therefore pressure central banks to delay such decisions.

“Yield curves have flattened, which usually suggest a less robust growth picture. Along with scope for an increase in market distress, this may ultimately make the Fed somewhat less hawkish, which should then also support gold,” the Bank of America Merrill Lynch (BAML) told Kitco.

Moreover, the BAML analysts assert that the volatility of assets such as equities are underestimated, and that a greater proportion of investors’ portfolio should go to gold.

“We believe markets are somewhat too complacent and investors should build positions in volatility-exposed instruments. Broadly, we believe that there are various alternatives to protect portfolios against increasing policy risk and a rapid reversal in investor positioning. Investors could opt to increase their gold allocations,” the analysts said.

In other news South Sudan, Africa’s newest state, has seen an unwelcome premium on the yellow metal. Faced with currency collapse, skyrocketing inflation and endemic violence, many in the population are looking to unlicensed gold mining to save wealth according to a recent Bloomberg report.

The newswire says that those who have previously lost their wealth in looting and raiding are looking to the illegal gold trade to support themselves. “Many of us are going to look for gold because we know the profits are big,” said al-Nur, a gold trader, in an interview. He had lost $20,000 from a looted store but now sells gold in the capital. “It is a big risk but after I lost the shop, there was nothing else to do but to try and raise money as quick as I can”, he said.

Photo: Reed Gold Mine, NC, said to be the “site of the first documented commercial gold find in the United States.” Credit: Neal Wellons, licensed under CC BY-NC-ND 2.0

Link to this article: : http://www.goldmadesimplenews.com/gold/gold-could-hit-1400-by-year-end-says-new-report-13260/

Posted by on Jul 6 2017. Filed under Gold News, Mining. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.

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