Precious metals sideways ahead of Fed wind-up and press conference, big institutions out with bullish 12 to 18 month forecasts

(USAGOLD – 7/29/2020) – Precious metals are trading sideways in advance of today’s wind-up to the FOMC meeting and press conference and the tumult of the past several days. Gold is down $3 this morning at $1958.  Silver is down 5¢ at $24.45.  Citibank, Goldman Sachs, UBS, and Bank of America are out with updates to their gold forecasts. Goldman, UBS and Citi see the yellow metal going to the $2300 level over the next twelve to eighteen months. Bank of America, still the most bullish of the big institutions, projects a $3000 price over the next eighteen months.

Goldman hinted at a longer-term commitment to the precious metals saying that “[c]ombined with a record level of debt accumulation by the US government, real concerns around the longevity of the US dollar as a reserve currency have started to emerge. We have long maintained gold is the currency of last resort, particularly in an environment like the current one where governments are debasing their fiat currencies and pushing real interest rates to all-time lows.” [Empahsis added] Goldman also sees silver going to $30 over the next three to twelve months.

Chart of the Day

bar chart showing growth in the interest paid on the national debt 1970-2019Source:  U.S. Bureau of Economic Analysis

Chart note:  Even though rates are plummeting, interest paid on the national debt continues to rise.  The U.S. government has already added over $3 trillion to the national debt thus far in 2020.  As a result, even at record low interest rates the actual dollar outlay for interest on the debt is likely to be significantly higher.

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