(Kitco News) – It has been another grind for gold investors, with the precious metals caught in a sticky consolidation phase. The yellow metal is being bought below $1,900 and sold above $1,920 an ounce.
According to most analysts Kitco News reporters have talked to, investors can expect the consolidation to continue until after the Nov. 3 U.S. General Election. The on-again/off-again stimulus negotiations in Congress has dictated gold action this past week. Despite some lingering optimism, many analysts and economists are not expecting anything to happen until after the election.
But as the markets hold their breath, there is still just enough uncertainty and haunting memories of 2016 to ensure that nobody is making any big bets one way or another.
“Gold is in the doldrums, with relatively low volumes and still range-trading; and likely to be so until the approach to the election, especially given that the markets are now sensing a tightening in the Presidential race, and not discounting a repeat of the 2016 outturn,” said StoneX head of market analysis for EMEA and Asia regions Rhona O’Connell in a recent report.
Although gold is directionless now, that doesn’t mean the bull run has ended. Many analysts have said and reiterated that it is difficult to be bearish on gold after so much stimulus has been pumped into financial markets.
According to news reports mid-week, the Federal Reserve hit another major milestone. Its balance sheet hit another record, pushing above $7 trillion. Regardless of who wins the election, more money will be pumped into the global economy, which will drive gold prices higher.
Although it’s a little early, we are starting to see analysts talk about what we can expect next year. ANZ said that they see gold prices pushing to $2,200 an ounce by the end of this year and pushing to $2,300 in early 2021.
“”The outlook for gold is positive amid mounting economic concerns due to C-19 surges. Accommodative central bank policies and liquidity injections are broadly supporting the market,” the analysts said in their report.
Steve Dunn, head of exchange-traded products at Aberdeen Standard Investments, said that he would be surprised if gold prices didn’t challenge the August all-time highs by the end of the year.
Looking at 2021, he said there is potential for gold prices to push to $2,300 an ounce.
So in the current environment, I wanted to end with the world of commodity analyst Andrew Hecht: “Embrace the dip” because higher prices are coming.
Have a great weekend.
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