Will gold prices hit $2,000 an ounce? More analysts bullish on yellow metal

Analysts at Citigroup said in September that gold could hit $2,000 an ounce in the next two years. The current high $1,921.17 an ounce during the 2011-12 rally.

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A combination of factors including expectations of further rate-cuts in the United States and uncertain geopolitical conditions could cause a price spiral in gold, analysts have said. According to a London-based mining analyst at Global Equity Research, the yellow metal's price could go past US$1,600 an ounce.

On Wednesday, spot gold rose to $1,510.50 per ounce while US gold futures gained 0.8 percent to hit to $1,516.20 per ounce. Rising concerns over the health of the global economy have prompted investors to lap up the bullion, which is seen as a safe asset during times of turmoil. Apart from the China-US trade war and Brexit fears, factors such as the US Federal Reserve's dovish stance and rising gloom in global economy are also supporting a nascent gold rally.

"Most central banks have been cutting rates in the last six months to pre-empt a slowdown. As a result, gold prices have gone up by some 20 per cent. An increase of between 5 and 7 per cent from hereon wouldn't be a difficult bridge to cross," analyst Venkat Ramana Nandyal said, according to the Business Times.

Gold touched its record price during the 2011-12 rally, when prices hit $1,921.17 an ounce.

Gold prices hit a six-year high in September after global central banks eased policy in the backdrop of a widespread slowdown in growth and rising fears of a trade war.

jerome powell
Federal Reserve Governor Jerome Powell listens during an open board meeting at the Federal Reserve in Washington. Reuters

Also in September, Citigroup said gold prices could rally to an astounding price of above $2,000 an ounce in the next two years. "We expect spot gold prices to trade stronger for longer, possibly breaching $2,000 an ounce and posting new cyclical highs at some point in the next year or two," Citigroup analysts said in a note on Sept. 10.

"For now, the U.S. consumer and potential growth story is holding up ... we remain more concerned about market signals -- three-month to 10-year yield curve inversion -- and leading indicators that are weakening at the fastest pace since the Great Recession," the note added.