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If coronavirus fallout lasts into Q2, gold price could see $1,800 levels - Goldman Sachs

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If coronavirus fallout lasts into Q2, gold price could see $1,800 levels — Goldman Sachs

(Kitco News) Goldman Sachs issued an upward revision to its 12-month price projections for the yellow metal — not ruling out $1,800 an ounce.

“In the event that the virus effect spreads to Q2, we could see gold top $1,800/oz already on a three-month basis,” Goldman analyst Mikhail Sprogis wrote in a note on Wednesday.

The increasing number of coronavirus cases worldwide, low real rates, and risks surrounding the upcoming U.S. election are driving gold prices, according to Goldman.

Gold is a “the haven of last resort,” said Sprogis, noting that the precious metal has been performing better than the Japanese yen and Swiss franc.

The bank’s previous forecast called for $1,600 an ounce gold by mid-2020. Now, Goldman is projecting a rise to $1,700 in three months and then an advance to $1,750 in six months.

“We see such a rally being driven by the continued search for yield, increased demand for portfolio diversification and higher political uncertainty … [Gold is being used as] a strategic allocation to protect a portfolio from geopolitical risks such as the current outbreak, de-dollarization and negative real yields,” the note said.

At the time of writing, gold prices were back to making fresh gains as the U.S. stock indexes sold off, with the Dow erasing more than 500 points on Thursday.

April Comex gold futures were last at $1,654.40, up 0.69% on the day, supported by the spread of the coronavirus outbreak and rising investor fears.

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