Gold Price (XAUUSD) Outlook Boosted to $2,500 – Bank of America

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Gold price (XAUUSD) cruised past the important milestone of $2,000 this week as investors remained worried about the weaker dollar and lower yields. And now, analysts believe that the rally is just getting started. In a report yesterday, I wrote that analysts at Deutsche Bank had boosted their outlook for gold price to $2,100.

Deutsche analysts are not the only ones bullish about the metal. For example, a few months ago, analysts at Bank of America made an audacious call that the price would climb to $3,000. And, another analyst recently predicted that the metal would climb to $5,000.

In a report yesterday, analysts at JP Morgan raised their outlook for gold price from $1,850 to $2,000. They still remain a bit cautious about the price, with their mid tern target being at $1,600.

In an interview with Barrons delivered yesterday, an analyst at Barrons explained why he believes that gold price would hit $2,500. He explained that gold tended to have an inverse relationship with the US dollar index. Indeed, in the past few months, the dollar has slipped by more than 10% in the past three months while the gold price has jumped by 20% in the past three months as shown below.

Gold Price vs US dollar index
Gold Price vs US dollar index

In the calculation, he explained that with the US dollar index trading at $90, and with the real interest rates being at -2%, gold would be worth about $2,500.

Gold price technical outlook

A long-term chart shows that gold price has been in a strong upward trend in recent months. Really, the price started ascending on 1st January 2015, when it was trading at $1062. Since then, the price has formed a cup pattern.

The price is also above the 50-day and 100-day exponential moving averages while the RSI has climbed to the highest level since 2008. Therefore, the trend is likely to continue rising as bulls target the next resistance at $2,100.

However, on the flip side, a move below $1600 will invalidate this thesis. This price is slightly above the 78.6% Fibonacci retracement level.

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Gold Price Technical Forecast

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