Is the gold price worth $2500?
The precious metal broke above $2000 in mid-August, only to fall below that level, with Citigroup setting a price target of $2500 for gold. But with the commodity struggling to push higher is it really worth $2500 an ounce?
- Market conditions ripe for gold prices to trend higher
- Citigroup sets gold price target of $2500
- US dollar begins to mount a modest recovery against a broad basket of currencies
Gold has traded sideways over the last few sessions, but is likely to push above $2000 again after US Federal Reserve chairman Jerome Powell’s remarks at last week’s Jackson Hole Symposium, where he refused to rule out further action to support the American economy.
However, the price of the precious metal has failed to rally, with the US dollar finally stabilising against a broad basket of currencies. But the amount of money being printed by the EU, China, the UK and the US in a bid to support people and businesses impacted by the coronavirus will inevitably push gold prices higher after investors are done taking profits.
US dollar mounts modest recovery
GBP/USD declined to 1.3300 as the US dollar finally begins to mount a recovery, pushing gold lower, as traders appear to finally take notice of the potential economic impact a no-deal Brexit could have on the UK economy.
Gold has moved lower once again this week, following a rally into the 76.4% Fibonacci resistance level at $1989, according to Josh Mahony, senior market analyst at IG.
‘That takes us back into a confluence of support, with an ascending trendline and 76.4% Fibonacci coming into play today,’ he said.
‘Given the symmetrical triangle in play here, it looks likely we will see a turn higher to continue that pattern. That bullish view holds unless we see a breakdown below the $1903 swing-low.’
Citigroup sets $2500 target for gold
The precious metal hit a high of $2075 an ounce at the start of August, only to fall below $2000 shortly after, though gold continues to flirt with the psychological benchmark and is likely to push to higher highs in the months ahead, according to analysts at Citigroup.
‘When investors are hungry for gold, the metal has a habit of rising exponentially which has no parallel amongst metals,’ Citigroup analyst Heath Jansen said in a note to investors.
‘On a worst-case scenario for euro sovereign debt and US fiscal problems, we believe gold could repeat the extent of the 1970-1980 gold bull market, implying upside-risk to above $2500 an ounce.’
‘A short-term (but not long lasting) large spike in gold is still possible in our view,’ he added. ‘We would now rate that probability as above 25%, up from below 5% just weeks ago (because of increased sovereign financial issues), and growing.’
How to trade commodities with IG
Looking to trade gold and other commodities? Open a live or demo account with IG and buy (long) or sell (short) shares using derivatives like CFDs in a few easy steps:
- Create an IG trading account or log in to your existing account
- Enter ‘Spot Gold’ in the search bar and select it
- Choose your position size
- Click on ‘buy’ or ‘sell’ in the deal ticket
- Confirm the trade
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.
Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.
Trade on commodities
Trade commodity futures, as well as 27 commodity markets with no fixed expiries.1
- Wide range of popular and niche metals, energies and softs
- Spreads from 0.3 pts on Spot Gold, 2 pts on Spot Silver and 2.8 pts on Oil
- View continuous charting, backdated for up to five years
1In the case of all DFBs, there is a fixed expiry at some point in the future.
Live prices on most popular markets
- Forex
- Shares
- Indices
See more forex live prices
See more shares live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
See more indices live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.
