In its latest briefing note, the German bank Commerzbank has once again underlined its support for gold. The bank’s commodity analysts say that they expect the yellow metal to gain another £72 ($100) on current price levels within the next three months to close out the year around £1,385 ($1,900).
Commerzbank is also bullish into next year, setting out its prediction of “significant” gains and a 2022 overall target of £1,458 ($2,000). Crucially, the bank’s analysis shows that gold is currently trading under what’s expected, meaning now offers a strong opportunity to buy with prices steadily increasing.
Analysts say, “In our opinion, gold is currently trading at an unjustifiably low level and is too cheap compared to other asset classes: one troy ounce of gold is equivalent to just under 5% of the Dow Jones Industrial Average. Over the past ten years, it has averaged 7.6%, at its peak even more than 17%.
“As soon as the U.S. Federal Reserve announces that it will start to reduce its bond purchases, an important obstacle for the gold price should disappear. Moreover, our economists expect U.S. inflation to start falling significantly as early as the fourth quarter. This should take some wind out of the sails of the interest rate hike expectations that have just emerged. Next year, U.S. inflation is even likely to fall below the Fed’s inflation target again, which should further weigh on interest rate expectations. We, therefore, expect the gold price to rise significantly over the next 12 months.”
