The gold rally could forge ahead to $4,000

Gold prices could forge ahead to $4,000 per ounce in the next three years, but factors such as the development of a coronavirus vaccine and the November U.S. elections could change the fortunes of the precious metal, analysts say. This year, gold prices have shot to record highs not seen since September 2011. Investors have been fleeing to “safe haven” assets as the pandemic shows no signs of abating. Last week, gold prices surged above $2,000 per ounce for the first time.

A looser monetary policy generally means investors are more likely to seek out gold as an asset. When real yields go down, gold prices will go up, and vice versa. In such a scenario, the opportunity cost of holding gold, a non-yielding asset, is lower as investors are not foregoing interest that would be otherwise earned in yielding assets.

Spot gold prices were last at $2,028.32. According to New York-based research provider Third Bridge Group, gold prices could fall to below the $1,600 mark after the elections, before rallying again next year.

In the 2016 presidential elections, after Trump’s surprise win over Democrat Hillary Clinton investors fled to gold, a safe haven asset. That pushed gold prices up nearly 5%.

The gold rally could forge ahead to $4,000, but analyst says two events could turn its fortunes, CNBC, Aug 10