Bank of America Expects Gold Prices to Soar to $1,350 in 2019
In the past few years, it seemed as if the whole world was bearish on gold. The yellow precious metal was called a pet rock, a useless asset, and other such names.
Here’s the thing: we are seeing that sentiment change.
Big banks turned bearish on gold back in 2013. Since then, they haven’t shown much interest in the precious metal. Now they are coming out in favor of gold.
The banks’ arguments for higher gold prices aren’t anything surprising. I have been talking about them for some time now. Nevertheless, it’s important to pay attention to what the banks are saying.
Consider Bank of America Corp. Not too long ago, it came out with a fairly bullish target for gold. It expects gold prices to average $1,350 in 2019. Just so you know, that’s 13% above where the metal currently trades.
Why the bullish take?
The head of global commodities and derivatives research at Bank of America, Francisco Blanch, said, “In the short run, the effects of a strong dollar, higher rates dominate [sic]. But in the long run, a huge U.S. government budget deficit is pretty positive for gold”. (Source: “Gold Set to Soar Above $1,300, Bank of America Says,” Bloomberg, September 23, 2018.)
He also mentioned that trade wars could take a toll on the U.S. economy, which could be bullish for gold.
“It could take longer, it could take shorter, eventually it’s going to happen, but maybe the Fed acknowledges it sooner, which is what people are going to be looking for in terms of getting more bullish on gold. We know that trade wars are not good for the economy,” said Blanch. (Source: Ibid).
Keep in mind, Bank of America isn’t the only big bank turning bullish on gold. The list of big banks looking at gold positively is becoming longer—and not just in the United States.
What’s Next for Gold?
Dear reader, as I said earlier, it’s important to watch what the big banks are saying.
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