Goldman Sachs: Why It’s a ‘Pound-the-Table Time’ to Buy Gold



Gold prices fell recently

Gold prices (GLD) fell by over 2.5% for the week ended March 1, their biggest weekly decline since August 2018. Mostly, the trade optimism between the US and China maintained the risk-on sentiment, thus impacting gold’s appeal. The chances of a potential trade deal between the US and China have increased significantly in the past week or so, which is giving momentum to the US dollar (UUP) (USDU) as well. A stronger dollar and a risk-on environment usually work against gold.

In addition, the equity markets are on a roll in 2019, keeping a lid on gold prices. Until March 4, the S&P 500 (SPY), the Dow Jones Industrial Average Index (DIA), and the NASDAQ Composite (QQQ) have gained 11.8%, 10.8%, and 13.1%, respectively.

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Goldman Sachs is positive on gold

Goldman Sachs’s (GS) global head of commodities research, Jeff Curie, however, is of the view that gold has sold off lately on overly optimistic views regarding the trade deal between the US and China (BABA) (BIDU). As reported by CNBC, he added, “We actually think this is a pound-the-table time to be buying gold right now.”

Gold’s safe-haven appeal

Goldman Sachs is optimistic on the precious metal, as it believes “gold’s safe-haven status will also likely see relative outperformance as late-cycle recession fears remain and several key central banks continue diversifying their reserve assets.” GS is sticking with its gold price (NUGT) (GDX) target of $1,450 per ounce for the next 12 months, which implies an upside of ~13% from current levels. Goldman Sachs (GS) turned positive on gold (GLD) for the first time in more than five years back in March. You can read Bulls versus Bears on Wall Street: Time to Buy Gold in 2019? for other investment banks’ views on gold prices in 2019.

You can also read Buffett versus Dalio on Gold: Whose Advice Should You Take for more information.


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