As gold prices remain on an upward trend, Bank of America says the rise in gold prices is set to test the 2012 highs of $1,790-1,805/oz in the next week.
Gold’s recent rice comes after months of escalating political and economic instability due to the resurgence of coronavirus cases, particularly in the US as well as the possibility of a trade war between the US and China. Worsening political relations between the US and the European Union over an aircraft subsidy dispute have also dented some of the investor optimism about the speed of a post-pandemic recovery.
The US reported a record daily rise in new coronavirus cases on Wednesday, with 45,557 new diagnoses, after states began reopening their economies in recent weeks.
Spot gold moved up slightly to $1,763 per troy ounce by Thursday afternoon in the European trading day, which is down from the $1,779.06 touched early on Wednesday, its highest since early October 2012.
Gold prices are up by around 16% since the start of the year – a rally that analysts see the as continuing due to the rising uncertainty over the virus and reemerging global trade tensions.
Bank of America chief global FICC technical strategist Paul Ciana expects the uptrend in gold prices to test the 2012 highs of $1,790-1,805/oz in the next week. Should it break through expected resistance at $1,800, bullion will then set its sights on the all-time high of $1,920.70 made in 2011, Ciana said in a note on Wednesday.
“The breakout occurring now that is ending second quarter completes an eight week trading range that has resumed higher,” Ciana explained.
“The range breakout targets 1900 while the head and shoulders continuation confirmed in April targets 1947. These patterns say gold can make a new all-time high in the (second half of 2020) with third quarter on our mind.”
Some analysts believe that a wave leading gold prices into the $2,000s is already underway, with an upside scenario of $2,114-$2,296.
From the start of 2020, gold has been increasingly in demand from investors who believe it is likely to hold its value relative to other assets as the virus shakes the global economy. As a result, gold ETFs even overtook futures as investors look for exposure to safe-haven assets like gold.
Futures and gold ETFs are a preferred way for investors to gain exposure to gold prices in a more controlled way.