Gold prices throughout the world are now about $2,000 per ounce, but BCA Research predicts the precious metal might soar to $2,200 this year.
According to a recent estimate made by BCA Research, a market research business formed in 1949 in Canada, gold remains a key hedge against inflation and financial market concerns, and its price will grow this year.
According to BCA Research, gold prices will rise to $2,200, a 10% increase from present levels. While many investors are looking for signals of softening from the US Federal Reserve (Fed), BCA believes there are many additional factors supporting rising gold prices.
The Fed may reduce interest rate decreases more than the market anticipates. The FedWatch CME reveals that the market expects interest rates to go below 4% by the end of the year, despite the fact that the central bank has announced three likely rate cuts this year.
At the same time, BCA does not anticipate a recession in the US economy. According to the Montreal-based market research business, reducing inflation pressure and steady earnings will enhance real spending, hence helping economic growth.
“After the pandemic, worker wages increased.” As a result, household spending power will rise,” the researchers said. This will last for a short time, even when the jobless rate returns to pre-pandemic levels.
Although inflation is predicted to fall, BCA Research expects it will fall short of the Fed’s 2% objective. This feature also contributes to gold’s appeal as a long-term inflation hedge. At the same time, researchers believe that growing government debt, geopolitical instability, and shifting globalization tendencies will promote long-term inflation.
“Rising public debt raises the risk of inflation in the medium to long term.” Economic fragmentation is similar in that it weakens well-developed supply networks and makes resource allocation less efficient,” according to BCA Research.
Analysts also believe that global unrest would increase gold prices, which are a popular “safe haven” asset for many investors. The transition to green energy, as well as the rush to obtain raw resources to satisfy long-term goals, may result in increased geopolitical tensions throughout the world.
Many analysts believe that gold prices will establish a new high this year as the US decreases interest rates, geopolitical tensions escalate, and central banks continue to buy.
According to J.P. Morgan, gold prices might “accelerate” in the middle of this year, hitting $2,300 as a result of interest rate decreases. UBS thinks that if nations lower interest rates, prices would hit $2,150 by the end of the year.
The World Gold Council (WGC) expects a 4% increase in gold prices if interest rates are decreased by 75-100 basis points (0.75-1%).