Gold price could hit $2,000 'in only a matter of days' - analysts
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(Kitco News) - It could only be a matter of days before gold pushes to new record highs above $2,000 an ounce with a surge in momentum sparked by safe-haven demand as investors face a prolonged military conflict in Ukraine between Russia and western NATO forces.
In a preview of what could happen, gold already hit a new all-time high against the euro, rising to an intraday high of €1,767.85 an ounce. Although prices have come off their session highs, the precious metal is still holding critical support levels well above $1,900 an ounce.
Ole Hansen, head of commodity strategy at Saxo Bank, said that gold and the U.S. dollar are currently battling for safe-haven status. The U.S. dollar appears to be winning out as the index trades at session highs at 97.51 points, up 1.36% on the day. At the same time, gold prices have fallen sharply from their session highs; April gold futures last traded at $1,929 an ounce, up nearly 1% on the day. Overnight gold prices were up almost 3%.
Although gold has fallen from its highs, Hansen said that it is still on course to push back above $2,000.
"The move in gold pushed the market into strongly overbought territory. If prices can stabilize above $1,923, then there is not much standing in the way of new all-time highs," he said.
Analysts also note that while the new military conflict in Eastern Europe is generating new safe-haven demand for gold, it's not the only factor benefiting gold and helping to push prices back to record highs.
David Madden, market analyst at Equiti Capital, said that although gold has been trapped in a range since the start of the year, it has seen significant support and held up relatively well.
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"Gold has held critical support when markets started pricing in five rate hikes and the U.S. dollar was hitting nearly fresh two-year highs," he said. "The conflict in Ukraine was an important catalyst for gold, but the market was in an uptrend long before this. I think it could only be a matter of days before gold hits $2,000."
Ronald-Peter Stoeferle, fund manager at Incrementum AG and one of the authors of the annual In Gold We Trust report, said that Russia's invasion added to market uncertainty that was already prevalent.
He added that since the start of the year, gold has been attracting new investor attention as equity markets struggle in the face of rising volatility and bond prices drop due to rising interest rate expectations.
"There are structural issues the global economy faces and in such an environment, you want to hold some gold," he said. "Gold is starting to discount the probability that central banks will have to reverse course on monetary policy before they even started."
Looking past the geopolitical uncertainty in Eastern Europe, Stoeferle said that the biggest threat to the global economy remains inflation.
Hansen said that the European economy is susceptible to the growing inflation threat, which is looking to push the single economy into a recession.
The new conflict will only exacerbate consumer price issues as energy and food costs become distorted due to further pressure on the global supply chain.