Goldman Sachs Revises Its $1000/troy Ounce Gold Call
Goldman Sachs’ $1000/troy ounce Gold call, in a year time, given few months back, hasn’t proved so well so far. Despite recent drop in gold prices, yellow metal is still up around 20% this year so far. Goldman cited extra-dovish attitude from U.S. Federal Reserve to hike rates and weakness in Dollar behind the rally in gold.
However the bank is staying bearish in gold as it feels, recent weakness in Dollar, may be running out of steam which will again push rates downward.
But it has revised its bearish outlook, somewhere upwards.
The bank now expects Gold price to drop from current $1275/troy ounce to $1200/troy ounce over next three months, which is dollar $100/troy ounce above from previous forecast. Then $1180 in six months (from $1050 prior) and $1150 in 12 months, which is higher by $150/troy ounce from previous forecast.
The bank justified its bearish outlook by suggesting that FED has only limited room to surprise to the downside. It also feels economy is in such path that FED will have to resume its normalization process soon enough, most probably in September but as early as July.
Though, Goldman Sachs is a respectable investment bank we would prefer to keep our finger crossed and maintain out bullish outlook, which we began, when Gold was at $1090. So given the current price and if followed our readers are still deep in the money.