'We still like gold at these levels': Prices can move another $500 by end of next year - Wells Fargo
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(Kitco News) Gold has been on a sprint since last year, breaking all kinds of residence levels, including $1,300, $1,400, $1,500, $1,600, $1,700 and now $1,800 an ounce. And for those wondering whether it is too late to get in, Wells Fargo has a reassuring answer: "We still like gold at these levels."
Gold is currently trading at fresh nine-year highs at above $1,820 an ounce. August Comex gold was last seen at $1,827.40, up 0.97% on the day.
"In May 2019, gold finally and definitively broke above the $1,300 per ounce resistance level—after six years of trying. In the year since that time, gold has made comparably quick work of the next major resistance levels," wrote Wells Faro investment strategy analyst Austin Pickle. "With our 2020 year- end target of $1,800-$1,900, we have been asked whether we still like gold at these levels. The short answer is a resounding, 'yes'."
The reason for that is that Wells Fargo sees gold rising all the way up to $2,200 - $2,300 by the end of next year, which means there is still a lot of upside potential — up to $500 worth to be precise.
"Gold has a host of drivers working in its favor, and [we] believe that gold is on its way to new highs," Pickle wrote on Monday.
However, it won't be a straight line higher in terms of future price moves. "Gold could take a breather in the short term," said Pickle.
Sustainably breaking above $1,900 an ounce will not be an easy task for gold.
"Sizeable positioning and powerful market sentiment often are anchored at milestone prices. It can take time to clear out those positions and convince market participants that conditions exist for even higher prices," Pickle explained. "In the chart below, we can see examples of this process at each of the recent major price resistance levels. The chart shows the price of gold in purple and the relevant resistance levels in orange. Notice that at each major resistance level, gold has struggled for months before decisively breaking out."