08.10.202010:31 Forex Analysis & Reviews: Gold: growth from $2,000 to $20,000?

The dispute between analysts and traders about gold's average price still remains. The previous forecasts for gold suggested its growth to $2000–$2500 per 1 ounce, however, it turned out that this is not the limit.

Egon von Greyerz, head of the Swiss management company Matterhorn Asset Management, originally expressed this viewpoint. This analyst stated that gold's average value should be ten times higher than the current one. Based on his calculations, it should be traded near $20,000 per ounce. The reason for this expensive price will be the exponential growth of the global money supply and the debts of a number of states. The printing press, launched by the Fed, will provoke hyperinflation, which can lead to a drop in purchasing power of fiat money. After that, he is sure that precious metals will appear on the scene, primarily gold. This time will come, which can even outdo the predicted average price of $ 20,000 per 1 ounce.

Currently, the indicated metal balancing between global political instability and maintaining the status of a defensive asset, is trying to reach the round level of $2,000 per 1 ounce. Although all attempts failed, experts record temporary growth. These include the recent rise in its price caused by D. Trump's COVID-19. Against the background of this news, gold surged by 1%, breaking the barrier of $ 1900 per ounce. It should be noted the demand for the main protective asset increased amid the rising global problems. By the end of this week, the situation has stabilized, and its quotes slightly declined. Today, gold started at $1,889-$1,900 per ounce, but plummeted to the range of $ 18,87-$ 1,888.

According to metal analysts, such factors as low interest rates, second wave of the COVID-19, upcoming US presidential elections, as well as large-scale measures of monetary and fiscal stimulation of the economy contribute to the growth of the prices of gold. It should be noted that the adoption of such measures helps to reduce the purchasing power of Fiat currencies, being a step for further growth of gold.

D. Trump's recent refusal to further stimulate the national economy has led to a drop in gold. The quotes of this metal declined following key US indices – NASDAQ, Dow Jones and S&P 500. Now, the gold's position is at disadvantage: it is in the grip of economic stimulus measures and the minutes of the September Fed meeting. We can note that the recent decisions of the regulator were not good for gold, although it supported the growth of the US currency.

The risk of the further growth of gold is represented by likely issues after the US presidential election. Experts are concerned about the possibility of political clashes and rallies in the country. However, the atmosphere of uncertainty and anxiety serves as a driver for gold. In this situation, investors are moving to this "safe haven" to wait out the political and economic storms with the least losses. If this scenario is implemented, gold will easily break the $1,900 barrier and reach $1,950-$2,000 per 1 ounce. According to preliminary calculations, this may happen by November-December of this year.

On the other hand, in case of a full-scale geopolitical conflict or the introduction of strict restrictions around the world against the background of COVID-19, the precious metal will break previous records, reaching $2,100 per 1 ounce. In such a situation, as well as with the escalation of global tension, experts are sure that the price of $20,000 per 1 ounce will not be the limit.