Goldman Sachs maintained a bullish 12-month outlook on the price of gold despite cutting back its three- and six-month forecast after the yellow metal slipped recently alongside other assets as investors moved into cash positions over coronavirus fears.
The bank believes that the price of gold will reach $1,800 an ounce over the next 12 months, while it trimmed its shorter forecasts by $100 each to $1,600 and $1,650 an ounce, according to Kitco.
Gold prices are widely expected to tick up, with some analysts seeing it hitting the $2,000-an-ounce mark in the next year, as investors seek out its safe-haven status in uncertain economic times.
The coronavirus pandemic will drag the U.S. into a recession after a sharp decline to economic activity through the first half of the year, Goldman Sachs said.
“We maintain our bullish outlook on gold, as the larger-than-expected shock to the global economy will likely lead to greater risk aversion,” Goldman analysts said in a note, adding that the recent slide in metal’s price was due to “a run for cash” that resulted in long liquidation by bulls who collectively held an elevated long position in gold.
“Gold was also hurt by the fall in oil prices.”
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Crude oil also fell sharply during the last week as more countries issued lockdown measures amid concerns over the COVID-19 outbreak.
Popular during times of turmoil, gold is seen as a safe haven. Fears of a recession continue to build as the world reacts to the growing spread of the coronavirus.