Top Analysts Are Bullish On Gold

Several economic events in 2016 troubled the international financial markets. Brexit caused a lot of volatility in June…hence the magnitude of the economic fallout remains uncertain. Although equity markets quickly recovered, gold vigorously rallied as it is considered to be one of the safest assets in times of crisis.

The price of the precious metal appreciated significantly since the beginning of the year. On Dec 31^st 2015, gold closed at $1,061…and it currently trades at $1,335.

Investors are now asking themselves whether this extremely strong upward trend in the gold price is going to continue, or whether it will flatten out. Some fear it may even retract to the levels of 2014 and 2015. What are Wall Street analysts saying about the price of gold and where do they expect it to go?

The overall consensus is very bullish, which is good news for gold investors.

Technical analyst Zev Spiro explained on CNBC that he expects the gold price to rise to $1,450. The price chart provides very strong evidence for this assumption. According to him, gold broke through the upper resistance level of a two-year downward channel in March. From a technical point of view, gold is now set to reach $1,450, unless it drops back below the lower end of the channel, which is at $1,205.

Goldman Sachs’s analysts are less bullish on the precious metal. They see the 2016 price target for gold at $1,260, stating that the long-term development of the gold price will be significantly impacted by the economic shock that Brexit created. According to Goldman’s analysts, factors that may put a damper on the rising gold price are the Fed’s hawkish behavior and the strengthening of the US Dollar.

Due to the fairly strong demand for gold and its relatively high price, Goldman’s analysts are bullish on gold producers’ stocks. Barrick Gold was added to their conviction buy list, with a price target of $27. The stock currently trades at $21.42. Newmont Mining has also been upgraded and the stock’s price target raised to $47. The stock currently trades at $44.65.

Credit Suisse is much more upbeat concerning the gold price. Their price target for gold is $1,500. Moreover, they estimate this price will be reached in the first quarter of 2017. Their reasoning for the bullish price target is partly based on the Brexit fallout, but they also consider gold to be an attractive investment and safe haven for investors in the currently prevailing low interest rate environment. Their price target for gold in the second half of 2016 is $1,413.

J.P. Morgan’s analysts are equally bullish on gold, setting their price target at $1,400. Moreover, their head commodities analyst believes that gold is heading for a long bull market. The investment bank currently advises its clients to buy gold.

Aside from spot gold and gold futures, other ways of investing in the precious metal have emerged over the past few years. These gold-backed securities have been designed to make gold more accessible, especially for smaller investors.

The SPDR Gold Shares Trust is the World’s biggest gold ETF, which had to make significant bullion purchases recently to meet demand. Short-term oriented investors can also trade gold via spread betting, which brokers such as ETX Capital offer.

The market consensus for gold is largely bullish. Indeed analysts confirm that the rally is intact. But it is imperative to assess what are the risks that gold investors currently face? According to Wall Street analysts, technical dips that move the price below historic resistance levels or a quick recovery of the British economy are the biggest risks at the moment. Consequently, investors should watch out for these events.