Ongoing geopolitical tensions around the world might not be good for people’s stress levels, but according to Citi analysts they will be good for gold.
The banks analysts see current uncertainty as the “new normal,” and in uncertain times people tend to move their money into safe-haven assets such as gold. According to a CNBC report, the analysts reckon gold will “push north of $1,400 per ounce for sustained periods.”
The current gold price is around $1,290 per ounce.
“Event-driven bids for gold seem to be occurring more frequently and may be the new normal,” the Citi analysts said. “In short, even as the rates and forex channel dominate the outlook for gold pricing, the yellow metal is increasingly being used by investors as a policy and tail risk hedge.”
Of course, not everyone wants a safe haven—people recently started searching for how to buy bitcoin more than for how to buy gold, suggesting some would prefer to risk volatility for big potential rewards.
And not everyone agrees with Citi’s envisioned trajectory for gold, either. Investment research outfit Edison said Monday that the gold price could fall as low as $661 per ounce in 2021, if the U.S. Federal Reserve were to drastically shrink its balance sheet without maintaining growth in cash in circulation.
“Philosophically everyone wants gold, it should always be safe but there is huge downside risk,” JPMorgan global markets strategist Nandini Ramakrishnan told CNBC.