Gold impressive run shows no signs of slowing down, having settled a ninth consecutive day of gains near all-time highs. The rally received a boost on Wednesday as the Federal Open Market Committee reiterated plans to maintain interest’s rates at record lows until the economy improves.
Low Interest Rate Boost
The low interest environment is a big boost for gold as institutional investors are increasingly shunning yields in favor of safe-haven such as gold; Investors are increasingly shunning the bond market, which has come under pressure on the cutting of interest rate to near the zero mark.
In addition, gold is winning a wider fan base as unlikely investors in Pension Funds, insurance companies, and private wealth specialists’ scamper for safety away from the yield-starved investing landscape.
Likewise, gold’s trading volume has increased significantly in the wake of the precious metal powering to the $1980 level. Increased talk that the metal could take out the $2,000 level has only continued to fuel buying spree on pullbacks.
Gold Price Targets
Veteran investor Barry Dawes of Martin Place Securities believes the current environment could be the catalyst that could see gold powering to the 3,500 level. Resurgence in coronavirus cases compounded by geopolitical tensions between the U.S and China has continued to fuel demand for the safe-haven as investors scamper for safety.
Wall Street and a number of international banks remain bullish about Gold prospects given the low interest rate environment and the fact that central banks are piling up debt in the form of a stimulus package. Goldman Sachs in a research note has indicated it expects gold to make a run for the 2,300 level in the next year.
Gold attracting widespread institutional ownership is a development that continues to fuel the hefty price targets from research firms. Swiss Private Bank Lombard Odier & Cie SA has already confirmed the addition of gold to strategic asset allocation. Pacific Investment Management Co has called for diversification when it comes to asset allocation with gold feeling like an appropriate diversifier as interest rates look set to remain at record lows for years.