Goldman Sachs has a bullish outlook on gold. Analysts at the investment bank see prices pushing to $1,600 an ounce next year. The price of gold currently sits at $1459.62. That is a nearly 10% gain from present day prices. December gold futures are trading at about $1,456.70 an ounce.
“Investment deficit creates excess savings, supporting gold. In theory, savings should equal investment, but due to this decline in capex and a rise in precautionary cash balances, a savings surplus is beginning to develop that is supporting gold prices,” the analysts wrote. “When combined with 750 tonnes of central bank gold purchases related to de-dollarization and defensive portfolio rotations, the savings glut means we maintain our bullish gold stance in 2020 with a target of $1600/toz..”
The investment bank’s analysts believe that heightened global uncertainty, along with slowing economic growth, could support gold prices. Recession concerns remain, moreover, according to the analysts. Increasing inflation, as the Federal Reserve keeps interest rates low, could buoy gold prices. A potential flight from the dollar could also help support the gold price.
Goldman Sachs is less bullish on silver for 2020. The investment bank does see prices increasing to $18 an ounce, a gain of 6.5% over current prices.
“Outside of investment demand, silver fundamentals remain challenged as industrial demand contracted and mine supply, while flat this year, is expected to grow strongly in 2020,” the analysts said. “While we expect investor interest in the precious space to be high in 2020 it will likely be less than during 2H19 when recession fears spiked. In such an environment while gold investment can continue to grow silver often gets overlooked being the marginal precious metal.”