Will gold reach the stars or will it reach the treetops?

The ECB finally reached a record low of minus 0.5%. And the Fed gets its own, as well as many other central banks, including that of Japan. The question is, what will the gold do?

Compared to its brilliant period from May to August, the performance of gold over the last few days has been anemic.

Even after the European Central Bank returned to quantitative easing on Thursday, the yellow metal barely rose. The only consolation is that he had a huge pop at the beginning of the day that disappeared after taking profits before closing.

Until where will go gold? How long will it last for these summits?

All of this makes it difficult to predict the next breakthrough for gold – the height at which it will go, the length of the race.

So, to take up the question: what will the long gold make if the US Federal Reserve lowered its rates on September 18, as expected, even if, for a face value of 25 basis points?

And what happens if this action is followed by a wave of easing on the part of central banks, who all made political decisions on September 19, just one day after the decision of the Fed?

Does gold want to reach the stars then? Or will they just land on the treetops?

Two schools of thought

There are two streams of thought about where to go for the world's favorite hideaway.

The first is that the rally on gold has reached its point of exhaustion, which means that the gains out of size registered during the last four months will be less numerous. Even if there are, these advances will probably be repaid quickly.

On the other hand, the long positions in the precious metal are virtually unstoppable and could, if the stars line up, rewrite the 2011 record of over $ 1,900 an ounce.

RBC asks for $ 1,500 in gold

The Canadian banking group RBC, part of the first school of thought, Thursday provides a modest assumption of $ 1,500 for the remaining months of 2019 and 2020. The amount of the previous call was $ 1,350.

While the expected action of the Fed will be the underlying engine of the $ 1,500 gold, RBC has stated that the precious metal

"At this point, it seems that the conclusion of a free trade agreement between the United States and China has not come to fruition before the end of the year."

He added:

"We expect a seasonal recovery in the price of gold between December and January."

Nevertheless, RBC had a more moderate projection for 2021 and beyond, forecasting an average price of $ 1,450, compared with an earlier estimate of $ 1,300. For the long run, it cost $ 1,400.

RBC has not explained its limited prospects.

After having peaked at $ 1,565 in August over 6 years, Comex now holds just over $ 1,500, a gain of 17% over one year, against 20% previously. , which reflects bullion trading, is close to $ 1,500, with an annual gain of 15%.

Fed disappointment could prevent outperformance, says TD Group

TD Securities, another Canadian financial institution, also expects the yellow metal to continue its bullish trend, although the long-term gold-mining disappointment with Fed cuts may prevent outperformance. .

The group said in a note:

The ECB's notion of infinite QE, until inflation "converges" to 2%, represents a dovish bias (…) and will continue to see rates fall as output reaches a yield ending in support gold.

But he also said that President Donald Trump's relentless pressure for the Fed to outperform its counterparts in reducing rates would probably not result in a corresponding action. Earlier this week, Trump called on US central bank officials to "head off" for their rate cuts and congratulated the ECB on Thursday for its "quick action" as the Fed "s' sits , sits and sits ".

Overall, TD Securities has stated that underlying economic weakness, the central bank 's lean bent, and the shortage of safe haven assets as the pile of negative – yielding securities are being dug " suggest that the path of least resistance for gold and friends is higher.

Citihgroup sees the $ 2,000 gold over the next two years

Meanwhile, Wall Street Investment Bank Citigroup (NYSE 🙂 belongs to the school of thought that expects gold to reach the stars.

Gold could reach record highs and even break $ 2,000 an ounce over the next two years if recessionary risks and rate cuts continue, analysts said Citi said in a note of Tuesday.

The group raised its gold target for the fourth quarter to $ 1,575, and its target for 2020 to $ 1,675.

He added:

"We believe that it is reasonable to consider a growing likelihood that bullion markets will go back to the nominal price peaks from 2011 to 2013 and trade between $ 1,800 and $ 2,000 an ounce of gold." 39; here 2021 and 2022, in favor of a US economic cycle turned to a slower growth / recession top of electoral uncertainty. "