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Are Analysts Turning Bullish on Gold Post-Brexit?

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Dec. 4 2020, Updated 10:52 a.m. ET

Median gold forecast

According to the median of 12 forecasts in a Bloomberg survey of analysts and traders, gold prices could reach $1,424 per ounce by the end of the year. Estimates in the survey ranged from $1,375 to $1,600 per ounce.

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Goldman Sachs turns positive on gold

Goldman Sachs (GS) has raised its three-month price target for gold to $1,300 per ounce from $1,200 per ounce. It increased its six-month target to $1,280 from $1,180 and its one-year target to $1,250 from $1,150.

Goldman Sachs analysts said, “The ultimate trajectory will depend on the intensity and duration of the uncertainty shock created by the leave outcome and any potential revisions to the U.S. growth outlook, both of which remain highly fluid in the current context.”

Other analysts also suggest gold

According to Société Générale, “The heightened market uncertainty will prompt investors to seek safe-haven assets, benefiting gold and the rest of the precious metals. While, arguably, some of this uncertainty has already been priced in, there is likely much more to come.” The brokerage firm expects the price of gold to reach $1,400 per ounce.

According to HSBC precious metal analyst James Steel, “In periods of uncertainty, gold is often one of the few perceived ‘safe haven’ assets with liquidity.” He added, “The uncertainty spurred by this vote will likely elicit sufficient gold purchases to buoy prices.” HSBC believes gold could reach $1,400 per ounce on a safe-haven bid.

Macquarie Research has voiced a similar opinion, saying, “Gold price will go higher in the third quarter as the full ramifications of Brexit begin to be felt but expect it to fall back in fourth quarter after the U.S. election and as the Fed gets ready to hike again.” It increased its third-quarter forecast to $1,350 per ounce.

Goldman Sachs has also upgraded Randgold Resources (GOLD) to “buy” from “neutral” on renewed gold price strength. Other stocks such as Eldorado Gold (EGO), Alamos Gold (AGI), and AngloGold Ashanti (AU) should also be well supported in case of a sustained increase in the price of gold (GLD).

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