Gold prices can rise 13 in 18 months to hit 3500 an ounce : BofA Securities

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The Uncertainty Factor

The ongoing trade tensions between the US and its major trading partners have created an environment of uncertainty that is affecting the global economy. The Trump Administration’s trade policies, particularly the tariffs imposed on steel and aluminum, have led to a decline in the value of the US dollar. This decline in the USD has a ripple effect on the global economy, as it makes imports cheaper and increases the cost of exports.

The price of gold rose from $1,800 to $2,500 per ounce, with the average price per ounce reaching $2,200.

  • Diversification: Gold provides a hedge against inflation, currency fluctuations, and market volatility, making it an excellent addition to a diversified investment portfolio.
  • Liquidity: Gold is a highly liquid asset, allowing investors to easily buy and sell it on the market.
  • Store of Value: Gold has historically maintained its purchasing power over time, making it a reliable store of value.
    Central Banks and Gold Reserves

    • Central banks currently hold about 10 per cent of their reserves in gold, but could raise this figure to 30 per cent to make their portfolios more efficient.

    This move is expected to increase demand for gold and drive up prices.

  • *Supply and demand*: The balance between the amount of gold available for investment and the amount of gold being consumed or sold.
  • *Economic indicators*: Interest rates, inflation, and GDP growth can all impact gold prices.
  • *Central bank policies*: Decisions made by central banks, such as the Federal Reserve, can influence gold prices.
  • *Global events*: Wars, natural disasters, and other global events can impact gold prices.
    The Role of Central Banks in Shaping Gold Prices

    • Central banks play a significant role in shaping gold prices.

    Key Takeaways

  • Chinese companies are expected to purchase gold actively and use their allowance within a year.
  • Domestic insurers have invested a total of RMB 32 trillion, or $4.4 trillion.
  • BofA Securities predicts that Chinese companies will continue to invest in gold, driven by the country’s economic growth and increasing demand for the precious metal.
    The Rise of Chinese Gold Investment

    • The Chinese government has been actively promoting the development of the gold market in China, with a focus on encouraging domestic investment in the precious metal. This has led to a significant increase in gold demand from Chinese companies, which has in turn driven up prices. • The Chinese government has implemented policies to encourage domestic investment in gold, including reducing taxes and fees for gold mining and refining. • The government has also established a number of gold-related financial institutions, such as the China Gold Exchange, to provide a platform for gold trading and investment.

    Further details on this topic will be provided shortly.

    Further details on this topic will be provided shortly.

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