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Gold is in recovery mode but is this a start of another bull run or just a reaction to an oversold drop in November? This is exactly what Kitco News asked the analysts this week and the optimists prevailed.
Just a bit of background here, gold rose back above $1,800 an ounce in December and even attempted to hit a key level of $1,850 several times. Analysts say that once that level is breached, gold could be ready to approach $1,900. After that, the key resistance level becomes $1,925, which would then clear the path towards $1,975.
Triggers to watch are raging coronavirus numbers, stimulus talks, equities performance, and the Fed meeting next week.
Standard Chartered said that despite some short-term obstacles, gold will return to its peak of $2,000 in the next couple of months. It added that vaccine and economic recovery will not be felt until the second half of next year.
TD Securities told its clients the meltdown in gold is likely over, adding that gold will keep rising north of $2,000 in 2021.
Another major topic this week was bitcoin and the debate whether it is stealing attention away from gold.
Singapore's United Overseas Bank wrote in a report that bitcoin's massive surge in popularity could be PARTLY to blame for gold's drop in November, but it is far from being the only reason.
JPMorgan Chase went even further, saying that bitcoin's wider adoption is having a direct impact on gold. And this could trigger a major shift in institutional allocation between the two assets.
JPMorgan strategists said: "The adoption of bitcoin by institutional investors HAS only begun … If this proves right, the price of gold would suffer from a structural headwind over the coming years."
In other news, Wells Fargo examined the role of cash in a portfolio and asked whether some are holding too much of it? The bank defined cash as "a temporary parking place for funds" and warned that it does not work long-term.
By Anna Golubova
For Kitco News
