High gold prices are being driven by lawmakers and this is a threat: Goldman Sachs

Gold’s uncontrolled rise in recent weeks has been largely fueled by free-spending lawmakers and the subsequent threat to the US dollar as a store of value, the Goldman Sachs strategist said in a new note Tuesday.

“The recent surge in gold prices to new all-time highs has substantially outpaced both the rise in real rates and other alternatives in US dollars, such as the euro, the yen and the Swiss franc. We believe this disconnection is being driven by a possible shift in the US Federal Reserve Towards an inflationary bias against a background of mounting geopolitical tensions, high US national political and social uncertainty, and a growing second wave of Covid-19 related infections. a record level of debt accumulation by the US government, real concerns have begun to emerge about the longevity of the US dollar as a reserve currency, “explained Goldman strategist Jeffrey Currie.

Gold prices have risen (despite the stock market surge since the March lows) to nearly $ 2,000 an ounce, a record high. Total gold holdings in gold-backed ETFs are at a record, registering inflows in 18 consecutive weeks, according to Bloomberg data. The move has been extended to gold-focused stocks, such as Freeport McMoran (up 24% in the past six months) and, of course, the SPDR Gold Trust ETF (up 20% over the past six months).

Shiny gold bars with stack of coins as business or financial investment and wealth concept. Credit: Getty

Goldman’s Currie now expects gold prices to reach $ 2,300 an ounce in the next 12 months. Currie’s bullish view on the price of gold is consistent with what other experts have told Yahoo Finance.

“Gold is a huge market, mainly liquid. Simultaneously with the next decline in equities, we will see gold exceed $ 1,800 an ounce and continue on its way to more than $ 2,000 by the end of the year, ”said Sprott CEO Peter Grosskopf in The First Trade at Yahoo. Finance in late June. Clearly that call was precisely dead.

Grosskopf added: “I believe in libertarian policies, which has worried me about the central bank’s hand in the economy for a long time. I think gold is a natural hedge for that. “

Goldman also seems concerned.

is a general editor and co-anchor of The first trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and in LinkedIn.“data-reactid =” 38 “>Brian Sozzi is a general editor and co-anchor of The first trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and in LinkedIn.