Bank of America (BofA) has raised its gold price forecast to $US3000 ($4751.10) an ounce over the next 18 months in a report titled, ‘The Fed can’t Print Gold’.
This is a 50 per cent jump on its previous 18-month target of $US2000 an ounce.
BofA predicted that the precious metal could reach the price of $US2063 by 2021, which translates to $3267.63 at the exchange rate at the time of writing.
Gold is forecast to average $US1695 an ounce this year.
The BofA analysts noted, however, that the appreciation of the US Dollar, reduced volatility in the equity market and weak jewellery demand in China and India could hold back the forecast gold price.
“As economic output contracts sharply, fiscal outlays surge, and central bank balance sheets double, fiat currencies could come under pressure,” BofA analysts including Michael Widmer and Francisco Blanch said in the report.
“Beyond traditional gold supply and demand fundamentals, financial repression is back on an extraordinary scale.
“Rates in the US and most G-10 economies will likely be at or below zero for a very long period of time as central banks attempt to push inflation back above their targets. … Investors will aim for gold.”
The Perth Mint chief executive Richard Hayes said this was a very attractive time for Australian gold miners.
“We refine almost all of Australia’s gold and we’re certainly seeing that miners continue to be very busy, producing as much gold as they can,” Hayes told Australian Mining.
