Gold futures can grow in price up to $3.2 thousand per ounce in the fourth quarter of this year on the background of increased demand for protective assets, analysts of Swiss bank UBS believe.
The previous forecast envisaged growth of quotations up to $3 thousand per ounce, but futures overcame this mark last week.
Escalation of trade conflicts underlines the role of precious metal as a “safe haven” asset, UBS experts led by Wayne Gordon and Giovanni Staunovo noted. In their view, additional demand for gold will be fuelled by fears of recession in the US.
“We still believe that the decision to have around 5% gold in the investment portfolio will be optimal from a long-term diversification perspective,” they wrote.
Meanwhile, Doubleline Capital founder and chief investment officer Jeffrey Gundlach set an even more optimistic target price for gold at $4,000 an ounce.
“Gold continues the rally we’ve been talking about for a few years now,” said the investor, nicknamed the “bond king. – I’m going to make a bold prediction and say gold will get to the $4k mark.”
Gundlach added that he’s not sure that will happen this year. At the same time, he noted that gold buying by central banks is growing “on a very, very sharp trajectory” and that is unlikely to change anytime soon.
In his view, the probability of a recession in the U.S. economy this year is about 60 per cent.
April gold futures are little changed on Monday afternoon, trading at $3002.8 an ounce. Since the beginning of the year, the value of gold is up 12.7%.
As MarketWatch notes, in January 1980 – at the height of a period of particularly high inflation in the U.S., exceeding 14% – gold prices reached $873 per ounce. Adjusted for inflation in terms of modern money, it is about $3,580 thousand per ounce, according to Dow Jones Market Data.