Wall Street investment bank Goldman Sachs (GS) expects gold bullion to continue shining as investors flee the volatile U.S. stock market.
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Goldman Sachs analyst Lina Thomas has raised her price target on gold this year to $3,300 an ounce, up 6% from $3,100 previously. Thomas said that the price of bullion should continue to get a lift as investors seek safety from the current volatility in equity markets, and as central banks ratchet up their buying of the precious metal amid increased geopolitical turmoil.
Gold is currently trading at $3,054.24 and near an all-time high. Earlier in March, gold’s price rose above $3,000 an ounce for the very first time, boosted by economic uncertainty over trade tariffs and signs of an economic slowdown in the U.S. Gold’s price is up about 35% over the last 12 months.
Gold ETF Action
In her outlook, Thomas notes that there has been a sizable increase in money flowing into gold exchange-traded funds (ETFs) in recent weeks as nervous investors trade out of stocks and the benchmark S&P 500 index slumps.
Additionally, the Goldman Sachs analysts says that gold is being buoyed by expectations for two interest rate cuts in the U.S. this year. “While ETF flows generally track Fed policy rates, history shows they can overshoot during extended periods of macro uncertainty — such as during the Covid-19 pandemic,” she wrote. Lower interest rates reduce the opportunity cost of owning gold.
Goldman Sachs isn’t the only Wall Street firm that is bullish on gold. Bank of America (BAC) also just raised its gold price target to $3,500 from $3,000, also citing central bank buying and ETF demand.
Is the GLD ETF a Buy?
Most Wall Street analysts don’t offer ratings or price targets on the SPDR Gold Trust (GLD), so we’ll look at the ETFs three-month performance instead. As one can see in the chart below, the GLD ETF has risen 15.73% in the last 12 weeks.
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