Goldman Sachs is leading “a pack of bullish voices cheering for gold”, according a report by Bloomberg news agency.
Analysts at the bank have raised their forecast for gold, which they expected to climb to US$1,425 an ounce by the end of 2019, it said.
The Perth Mint Treasury backed the notion that continued uncertainty in financial markets offered the potential for gold to once again shine.
Factors contributing to uncertainty include Britain’s attempt to leave the European Union (Brexit) and US-China trade conflict.
Current equity market volatility coupled with an inverted yield curve (where yields on longer-maturity bonds tend to fall and those on shorter-term securities rise) may be reflecting the market’s expectations for weaker economic activity or perhaps even a recession, they said.
Such scenarios would be potentially negative for the US dollar, which would be possibly positive for gold as it tends to be inversely correlated with the American currency.
Meanwhile central banks, traditionally important drivers of the gold price, are “aggressively adding gold to their foreign exchange reserves”, leading Indian news website Business Standard reported, quoting data supplied by the World Gold Council.
The Reserve Bank of India had added nearly 40 tonnes to its reserves in a little less than year, it said.
In a separate report, Bloomberg quoted figures from the People’s Bank of China website showing the central bank of the world’s largest gold producer and consumer recently boosted its holding by 10 tonnes to 1,853 tonnes.
Traders at The Perth Mint said they expected to see a lift in Chinese retail buying ahead of Lunar New Year, which this year will be celebrated on 5 February.
The 2019 Australian Lunar Gold Bullion Coin Series marks the Year of the Pig which starts on 5 February.
