(Kitco News) Gold saw a surprising development this week — a run-up in price as Joe Biden was being sworn in as president of the United States on Wednesday. But can this be a start of a new bull rally? Here’s what the analysts had to say about it.
The reason behind the positive price action this week is a lot of optimism that the Biden could pass additional stimulus measures quickly by making it a priority.
OANDA senior market analyst Edward Moya told Kitco News: “There is a growing expectation that this is another bullish phase. The $1,900 level is likely to be short-term resistance this week, and we could see $1,950 by the middle of next month.”
Gold also stood its ground despite the widely expected comments from Treasury Secretary nominee Janet Yellen, who confirmed U.S. commitment to market-set currency rates during her testimony on Tuesday.
When asked about the U.S. dollar, Yellen said that the “U.S. does not seek a weaker currency” and that she would oppose attempts by other countries to do so. She also stressed that it is better to “act big” now when talking about further government spending.
According to the World Gold Council, gold’s 2021 drivers are ballooning deficits, inflation, and overvalued equities. “In this context, we believe the gold investment will remain well supported,” the WGC said.
Standard Chartered Bank expressed the view that the majority of gold’s 2021 gains will “materialize in the first half of the year.” The bank added: “We maintain a positive view on gold; expect prices to retest 2,000-dollar threshold and reach new highs.”
But despite these positive outlooks, the bears are still out there, with Capital Economics, for example, maintaining that most of gold’s “big gains are behind us,” citing vaccine rollout and risk-on sentiment as the main pressure points for gold.
DoubleLine CEO Jeffrey Gundlach held a webinar last week, where he praised Asian emerging markets and revealed that he is now “neutral on gold and bitcoin” while still arguing that 25% of your portfolio should be invested in real assets.