Despite short-term price weakness, gold’s long-term prospects are untarnished.
Luc Luyet, Currencies Strategist Pictet Wealth Management.
- Having risen to record nominal highs, gold prices have weakened over the past five weeks.
- We see this decline as a consequence of deteriorating investment demand because of the growing opportunity costs of owning gold and less supportive central bank demand.
- Gold prices could remain under pressure in the weeks ahead if opportunity costs keep on rising. But we continue to think a structural shift higher in official demand, together with a decline in opportunity costs and US dollar depreciation will help gold in the longer term.
- Our three-month projection for the gold price is USD2,000 and our 12-month projection is USD2,100.
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