$1,600 Gold Is on the Immediate Horizon

Gold resumed its upward trajectory on Tuesday, as stock prices crumbled under the weight of U.S.-China trade tensions after both countries implemented fresh tariffs on each other’s goods.

Several banks have upgraded their gold forecasts targeting $1,600 a troy ounce by 2020. Risks from trade wars, bond markets and the undermining of the fiat system should make bullion a rock-solid investment for the foreseeable future.

Gold Price Update

The value of gold jumped to a high of $1,558.90 a troy ounce, coming within $7 of a new six-year high. The yellow metal currently trades at $1,553.60 a troy ounce, having gained $24.20, or 1.6%.

Gold futures
Gold for December settlement, the most actively traded futures contract, approached $1,560.00 a troy ounce on Tuesday. | Source: Barchart.com.

Bullion has been riding high for much of 2019 and is now outperforming stocks by a considerable margin.

The same is also true of silver, which has outperformed gold in recent months. On Tuesday, the grey metal surged 84 cents, or 4.6%, to $19.18 a troy ounce, the highest since September 2016.

Precious metals rallied even as the U.S. dollar held relatively steady. The dollar index, which often trades inversely with gold and silver, edged up 0.1% to 98.97.

$1,600 a Troy Ounce

Analysts at BNP Paribas and UBS have joined a growing consensus calling for gold to reach $1,600 a troy ounce in the not-too-distant future.

BNP Paribas, a Paris-based financial institution, expects gold prices to average $1,510 a troy ounce in the fourth quarter before rocketing past $1,600 in the first three months of 2020.

“Our economists expect the Fed to initiate a ‘patient’ easing cycle, moving from insurance cuts to accommodation as US economic growth slows,” BNP analysts said, according to Kitco. “We expect four 25bp rate cuts between September 2019 and June 2020. As real rates move into negative territory in response, we expect gold to rise significantly.”

Fed Fund futures prices imply a nearly 93% chance that interest rates are heading lower this month, according to CME Group.

Wayne Gordon, executive director at UBS Wealth Management, says the bank is longing gold on the expectation that it will soon reach $1,600.

As Hacked reported in August, Goldman Sachs recently set a six-month price target for bullion at $1,600 due to U.S.-China trade tensions and weakening economic growth. At the time, it was Goldman’s first bullish forecast on bullion this year.

If bullion does surpass $1,600, it would be well on its way to record highs. The yellow metal is already trading at all-time highs against virtually every major currency except the greenback.

Featured image courtesy of Shutterstock. Chart via Barchart.com.

Author:
Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi