Longtime gold bear Goldman Sachs was forced to upwardly revise its price targets for the next year as it became clear that the Brexit referendum would not only pass but also would inject entrenched uncertainty into financial markets for the foreseeable future.
What are some of the other major investment banks, money managers, mining executives, and metals experts saying about golds post-Brexit prospects?
Academia Capital: Golds going to end the year even higher, said the hedge funds chief investment officer, Ivan Szpakowski. People are realizing that Brexit is going to be a longer, drawn-out process. Thats still positive for gold. Id say thats the commodity that should end the year stronger.
Australia & New Zealand Banking Group: Analysts reaffirmed their prediction of $1,400 gold prices over the next 12 months. There are still many questions regarding the U.K.s exit from the EU, they wrote. The ensuing political crisis in the U.K. and concern about the very future of the EU should keep investors on edge.
Credit Suisse: The Swiss bank sees gold reaching $1,500 by the first quarter of 2017. We raise our gold price forecast by 8% in H2/16 to $1,413/oz and 10% in 2017 to $1,450/oz on prolonged macro and political uncertainty following the Brexit vote, its analysts wrote. We see an extended timeframe for a negative real rate environment in the US and abroad and continued gold buying by central banks and consumers to diversify wealth. Our silver price forecast increases by 12%, to $18.75/oz, in H2/16 and by 15%, to $19.03/oz, in 2017, following gold.
Evolution Mining: I guess to me, the most interesting thing is: Are we seeing the first fault lines of a major correction and change in the financial and political systems? top executive Jake Klein told Bloomberg. If thats the case, then we could very well be at the early stages of a major bull market.
Gloom, Boom & Doom Report: For me, theres one currency that strikes be as being essentially, in the long run and amidst this environment of money printing, a no-brainer, and that is gold, Marc Faber told CNBC, predicting a new wave of post-Brexit monetary hijinks from global central banks. Now, is gold near-term overbought? Yes, it is. But longer-term, I think every investor should have some cash, which he would keep in yen or in dollars or in euros [and] should have some of this cash in gold. This is my preferred currency.
HSBC: Were looking for the market to get up to around the $1,400 level, said its top metals analyst, James Steel. Even before the UK vote, we had negative interest rates, which has actually been propelling gold to a degree higher all this year.
Insignia Consultants: Gold can cross $1,500 this year, said chief analyst Chintan Karnani, though he has doubts about whether the metal can hold that level. If the dollar gains substantially and expectations of another bull run in stock markets rise, then gold prices can fall to $1,176, he told MarketWatch.
Minelife: With the developments of recent weeks, I think theres every possibility that were looking at a price target between $1,400 and even $1,500 on the upside, said Gavin Wendt, raising his forecast from a previous upper range of $1,300. And I say that clearly and simply because gold ha already been moving strongly even before the Brexit vote. Gold was up very strongly against all major currencies.
Morgan Stanley: The investment bank has increased its 2016 price target by 8% and its 2017 forecast by 17%. Its ultimate target: $1,560. The firm says Brexit represents a brand new risk which has to be added to other positive factors for gold such as a languishing U.S. interest-rate cycle and Chinas high debt levels.
Oversea-Chinese Banking Corp.: The Singapore-based firm, whose economist Barnabas Gan has been one of the most accurate price forecasters of recent years, is predicting the metal could hit $1,400 if the Federal Reserve doesnt raise rates, while a single rate hike would curb the metals rise to just $1,350. With U.K.s exit from the European Union, we expect the risk-off sentiment to persist into the months ahead, he wrote. Gans previous forecast saw $1,200 gold by the end of 2016.
Societe Generale: The usually gold-bearish French banking giant has nonetheless raised its third-quarter forecast to $1,330 and its fourth-quarter target to $1,350. It sees silver averaging $18 into 2017.
State Street Global Advisors: We have got the Brexit result, but that is a result without a resolution, said top strategist George Milling-Stanley. The resulting uncertainties will likely continue to roil financial markets, which should benefit gold. As for his price target, he said, It is not difficult to see $1,400 or even $1,450 by year end.
These forecasts shouldnt be taken as gospel, but the yellow metal has at least three strong factors supporting its advance: Brexit uncertainty; the likelihood of more money printing from central banks in form of quantitative easing, zero and negative interest rates, and so-called helicopter money; and golds post-Brexit ability to attract safe-haven inflows even as the U.S. dollar rises and U.S. stocks show some resilience.