Citi analysts think gold could be in a consolidation range for some time
(Kitco News) - Precious metals analyst's at Citi believe gold could be consolidating for some time. The investment bank said, “We expect that XAU/USD could mostly hover between the $1,700-$1,900/oz range for the balance of the year and average $1,800/oz in 2021.”.
They went on to add, “We see several peak cycle risks for the bullion market. These include risk of the US Federal Reserve tapering asset purchases by end-2021 and more aggressive short-term interest rate trading pricing for policy rate lift-off in 2022/2023 which may, in turn, be USD supportive.” and as it has been noted, “The rise in 10-year Treasury yields this year is also a headwind for a long duration zero-coupon asset like gold.”
When looking at some of the other beneficiaries in the commodities complex Citi said “A risk asset and commodities reflation narrative amid a COVID-19 vaccine trade could also favor inflows into oil, copper and other markets versus gold.”.
Looking at some other forecasts, Australian bank ANZ, “gold’s upside looks limited by rising yield and buoyant risky assets”. ANZ’s gold price prediction puts the precious metal at an average of $1,850 per ounce at the end of June, rising to $2,000 per ounce by the end of September, but then falling back to $1,900 by the end of 2021 and $1,800 by mid-2022.