The second-largest bank in the U.S. predicts that a global stimulus frenzy by central banks will send gold’s value 50 percent higher than its all-time record.
That $3,000 price prediction would represent a 50 percent increase in value from its all-time record of $1,921.17 set in September 2011.
The coronavirus pandemic has spread to 185 countries and regions globally. More than 2.58 million people have contracted the virus with more than 178,000 deaths reported, according to Johns Hopkins University.
Demand for gold tends to benefit from widespread stimulus from central banks and the pressure this applies to currencies, as the yellow metal is often seen as a hedge against inflation and currency debasement.
“As economic output contracts sharply, fiscal outlays surge, and central bank balance sheets double, fiat currencies could come under pressure,” analysts including Michael Widmer and Francisco Blanch said in the Bank of America report. “Investors will aim for gold,” they added.
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Bank of America forecasts the average gold price in 2020 at $1,695 an ounce, before soaring demand pushes it to an average of $2,063 in 2021, Bloomberg reported.
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The U.S. investment bank Goldman Sachs believes that the price of gold will reach $1,800 an ounce over the next 12 months.
Hans Goetti, founder and CEO of HG Research, expects gold to reach the $1,800 milestone even sooner amid concern that the coronavirus pandemic will have a profound effect on the global economy.
Goetti said he believes that a gold price of $1,800 an ounce, a level that was last seen in 2011, is possible over the next few weeks or months.