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CIBC Sees Gold Hitting $1,500 An Ounce Next Year, Raises Long-Term Outlook

Kitco News

(Kitco News) - The fifth-largest Canadian bank reaffirmed its unequivocally bullish stance on gold as it raised its price forecast for the rest of 2019 and its long-term outlook.

In a report Monday, analysts at CIBC said that they see gold prices averaging around $1,425 in the third quarter. For the year, the bank sees the yellow metal averaging $1,365 an ounce. These forecasts are up from the previous outlook of $1,375 and $1,350, respectively.

For next year and 2021, the bank sees gold prices pushing to $1,500 an ounce. Long term, the bank sees gold prices holding above $1,400 an ounce, up from the initial estimate of $1,300 an ounce.

“Given the outlook for real rates in the U.S. to remain below the 2% mark on a more prolonged basis and a weak macro environment, we are not only raising our gold-price deck for the next several years, we are also raising our long-term gold price assumption,” the analysts said in the report.

The bank’s comments come as gold struggles to find momentum as prices continue to hold support above $1,400 an ounce. Comex August gold futures last traded at $1,411.70 an ounce, relatively unchanged on the day.

Along with a lower-for-longer interest-rate environment, CIBC analysts said that they expect central-bank demand to remain strong and general investors to embrace gold and diversify away from the U.S. dollar.

While CIBC sees higher gold prices long term, analysts are not as optimistic on silver. The bank said that it sees the gold-silver ratio hovering around 90. Kitco.com shows the gold-silver ratio currently trading at 92.41, down from its recent multi-year high of 93.44 earlier in the month.

“Given the increasing number of options for investors to seek exposure to gold, we do not expect that ratio to close back down to historical levels over the next year,” CIBC said.

Looking at silver prices, the analysts said that they see long-term prices holding around $16.50 an ounce, down from their previous forecast of $17 an ounce. September silver futures last traded at $15.31 an ounce, up 0.49% on the day.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.