— This is the script of CNBC's news report for China's CCTV on August 10, 2020, Monday.
Spot gold last week posted its ninth straight week of gains, it was the longest winning streak since 2006. In the face of the continued rise in gold prices, major investment Banks have also raised their target prices.
Citi economists predict that the price of gold is expected to increase to US$2,100 this quarter, and it is expected to further increase to US$2,300 in the next 6 to 12 months. Now, expectations about how high gold prices will go seem like a race among investors. Just two weeks ago, the market was still surprised by the expectation of $3,500 per ounce. And now, the highest expectation has seen $4,000 per ounce. The main drivers of these bullish arguments are the Federal Reserve's ultra-loose monetary policy and historically low real interest rates.
CEO&CIO, US GLOBAL INVESTORS
Well, if you just take a look at what the federal reserve balance sheet, how it is ballooned and what is necessary to turn this economy around. The last cycle, 2008 and 2009 were three trillion dollars, this is gonna probably push about $10 trillion. You look from back in two thousand and two thousand and nine golds between 1700 and three years later, it went to uh 1900. Uh, you can take a look at this cycle and take a look at this incredible growth as a percentage of GDP. Then it's quite easy to see gold going to $4000.
But with the gold price up more than 30 per cent so far this year, there is still plenty of caution about what might happen next.
BMO WEALTH MGMT US, CHIEF INVMT STRATEGIST
There are a lot of factors that support gold. We are just cautious. Extrapolating these current factors, too far in the future, especially when we know there are two big events on the horizon that could change the trajectory. Uh, one is, of course, the vaccine development. And the other is the election. Uh, toward the end of the year. We think both of those, but especially the vaccine, has the potential to shift some of those positive factors that are working right now in the favor of gold
In addition to these uncertainties, we should also note the changing structure of gold demand. Demand for gold jewelry has fallen sharply in China and India.
Demand for gold in India is expected to fall to its lowest level in 26 years this year.
Actually, central bank, jewelry and technology demand fell in the second quarter of this year, with only investment demand rising significantly
According to the latest data released by the World Gold Council, investment demand accounted for nearly 70 percent of the total gold demand as of July. This kind of demand side is unbalanced, also can bring certain risk to gold price.
However, in the current market, we hear more voice from the bulls. We will also keep a close eye on the future trend of gold prices