Goldman Sachs Foresees Huge Rally in Gold Prices, Driven by Inflation Risks

SEATTLE (Scrap Monster): The analysts at Goldman Sachs, in a note, said that gold prices are likely to break out of the current tight trading range in 2021, mainly on inflation risks. It foresees coronavirus disruption giving way to higher inflation.

According to analysts Mikhail Sprogis and Jeffrey Currie, gold prices had hovered around $1900 per oz since August this year. The rally on the back of election uncertainties in the U.S. saw a pullback owing to hopes of virus vaccine. In the near term, there exists no clear catalyst that could lift or drag the gold prices. However, the inflation concerns are likely to take centrestage in 2021, which in turn will lead to a breakout in prices, they noted.

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Goldman Sachs predicts gold prices at $2,300 per Oz in 2021, higher by 22% from the current levels. The strong rebound will lift prices of the yellow metal to new record high levels.

The demand for gold is likely to see strong uptrend in emerging markets. The demand has already started displaying signs of normalization in the key markets including China and India. The anticipated soft stance on trade policy by the new U.S. administration is likely to lend support to the rally in gold prices.

Traditionally, gold registers fall when long-term interest rates rise. A disruption of this trend was witnessed in 2012. A similar trend will materialize in 2021, said the note.