But the rally could fade by the middle of next year, with prices coming under pressure as central banks can’t keep the same pace of easing, he said. Investors will start looking at alternatives as economies recover.
There is added support for higher prices coming from the futures market, with some Comex contracts already topping $2,000 an ounce. Still, JPMorgan said a scenario in which U.S. real yields go much deeper into negative territory looks unlikely, while inflation will probably remain significantly below the Fed’s 2% target with the U.S. labor market remaining in significant slack well into 2021. That would help cool the gold rally.
“Things that we’ve learned from 2020 is to expect the unexpected,” said Kristina Hooper, chief global market strategist at Invesco Ltd. “All in all, I expect gold to move higher but remain in something of a range for a while, and it will take some other catalyst, like a spike in infections, rates in the U.S. or some sort of greater level of geopolitical risk to move it higher.”
This article was provided by Bloomberg News.