Bank of America and German bank, Commerzbank have both been weighing in on their expectations for gold prices in the coming months, and both lean bullish. Bank of America in particular is firmly pro the precious metal, with analysts forecasting record new highs towards the second half of the year.
Bank of America’s commodity strategist, Michael Widmer says there is a clear route to record price levels of around £1,643 ($2,000). It targets the second quarter of 2023 as the beginning of a sustained move to the upside for gold, with its forecasts pegging March as the end date for the Federal Reserve’s rate hike activity. With gold then expected to gain ground consistently through the third and fourth quarters, Widmer’s longer term forecast has gold prices climbing to £1,714 ($2,086) by 2024.
Commerzbank is also backing the gold bulls to enjoy a bumper New Year. Its analysts are in lockstep with Bank of America and expect that the Federal Reserve will formally draw a line under its rate hike policy in March. That, coupled with a further deterioration in the strength of the U.S. dollar, will then allow gold to gather momentum.
Analysts said, “After what is expected to be the last interest rate hike in March, a period of unchanged rates is likely to follow before the Fed cuts the key rate again toward the end of 2023 in view of a weak economy and lower inflation. The Fed, on the other hand, is not yet forecasting this. As soon as the Fed also adopts this view, the gold price should rise again.
“This should be the case in the second half of next year, because by then, inflation will have fallen far enough, and the U.S. economy will have been in recession since the beginning of the year. The gold price should also be supported by the weakening of the U.S. dollar expected by our currency strategists.” Commerzbank indicated it’s targeting £1,720 ($2,050) by the close of 2023.
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