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A Review of Gold’s Outlook from Leading Banks

What Do Major Banks See Ahead for Gold?

(Continued from Prior Part)

Banks on gold

Goldman Sachs (GS) converted itself to pro-gold following the massive jump in its price. It’s likely not only gold’s fundamentals that have influenced major banks, but also the global scenario as a whole.

JPMorgan Chase’s (JPM) strong eye on uncertainties and negative interest rates pushed it to take an optimistic leap on gold. Another crucial element influencing the decisions of major banks is the Federal Open Market Committee’s (or FOMC) upcoming policy-setting meeting. The Federal Reserve’s decision has substantially impacted gold in the past and will likely continue to do so.

Other opinions

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Canada-based Scotiabank’s (BNS) analyst Russell Browne advised that only a break of resistance at $1,303 or a break of support at $1,242 could substantially impact a directional change in gold.

BNP Paribas is looking at the $1,400 level for gold in the next 12 months. Falling currencies worldwide may result in more reliance on gold. The recovery of gold’s haven status in 2016 will be a crucial factor in gold’s performance going forward.

Investors may want to keep a close eye on the Chinese economy’s performance, negative rates of interest in Japan and Europe, and the Fed’s direction regarding further interest rate changes.

Leveraged funds

The above-mentioned factors may impact the prices of gold and other precious metals. They may also substantially impact funds such as the leveraged Direxion Daily Gold Miners ETF (NUGT) and the silver-based ProShares Ultra Silver ETF (AGQ). These two funds have risen 268.6% and 37.5%, respectively, year-to-date following rises in gold and silver.

Browse this series on Market Realist: