Long Gold Is Goldman Sachs Favorite Commodity Play Right Now

On top of being bullish on gold prices this year Goldman Sachs favorite commodity play at the moment is long gold.
Long Gold Is Goldman Sachs Favorite Commodity Play Right Now

Gold has a lot of potential and can hit USD 1,450, according to Jeffrey Currie, global head of commodities research at Goldman Sachs. 

When asked about his top play on commodities during an interview with Bloomberg this week, Currie replied: Long gold, we see that one with the most upside. 

The reason for such an optimistic outlook on the yellow metal this year includes recession fears, golds wealth-effect, and central bank buying, according to Goldman. 

We believe the world is A-ok right now, however, recessionary fears remain high and that is increasing the physical demand for gold. Wealth-effect is better for gold, and finally central banks are buying, Currie said. 

In terms of which banks are buying, Currie highlighted that India bought 70 tonnes last year and China started re-entering the market. 

One hundred tonnes of central bank buying gets you to USD 1,425 alone. Our target is USD 1,450, he said.

 This view supports Goldmans report published earlier in January, in which Currie said that Goldman was raising its gold price forecast for 2019 due to growing recession fears. 

Going forward gold will be supported primarily by growing demand for defensive assets. The same is also true of central-bank buying, with rising geopolitical tensions incentivizing more central banks to re-enter the gold market, Currie wrote. 

Increased central bank buying has been at the center of analysts discussions when it comes to higher gold prices. 

TD Securities issued a report in the middle of January, arguing that higher gold demand from central banks will lead to higher prices in 2019.

 Central bank gold holdings have grown by a dramatic 13 percent (roughly 3,900 tonnes) since the lows recorded back in 2009 and are expected to grow by another 800 tonnes over the next two years, TD Securities head of global strategy Bart Melek wrote in a report. In addition to continued purchases by Russia, Turkey, Kazakhstan, and India, now includes China— the yellow metal could well move above our positive projections. 

The Canadian bank also listed several reasons why central banks are buying more these days. 

The desire to diversify central bank FX portfolios from the USD, which still represents over 60 percent of global FX reserves, is one of the key reasons to buy gold, Melek wrote. The U.S. [will] likely [be] sharing its superpower status with China (possibly India over the long term), [and] golds reliability, time-tested ability to preserve wealth and almost universal acceptance makes it a good reserve asset. 

So far this year, gold is proving to be resilient in light of recovering equities and U.S. dollar. February Comex gold futures hit a seven-month high on Tuesday, last trading at USD 1,309.9, up 2percent year-to-date.

Want to know more? Fill out this form and we will get in touch to discuss our strategies. No obligations, Ever!

An offshore commodities and forex trading firm, Red Maple Trading offers a combination of first-class trading advice and an award winning portfolio management team with an exemplary trading record.

Red Maple FX offers both non discretionary trading accounts and fully managed trading accounts. Call Toll Free + 1 888 673 2812

More Posts
  • Precious Metals Settle Lower on Dollar Strength and Hawkish Fed Comments
  • Golds support at 1485 to restrict further declines - MKS PAMP Group
  • Precious Metals Tumble on an Easing of Geopolitical Risks
  • Gold prices poised to challenge all-time high
  • Precious Metals Settle Mixed as a Slump is Stocks and the Dollar Boosts Gold
  • Gold price to hit 1600 on geopolitical turmoil
  • Gold Futures Market News and Commentary
  • U.S. yield curve: Invert steepen repeat
  • Gold Silver Prices Firmer as Traders Buy the Dips
  • Why You Should Be Investing in Commodities
  • Learn How To Trade Orange Juice
  • Are We Looking at a Dead Cat Bounce in Oil
  • AAA: Gas prices will continue to rise nationally as Nevadans see 4th highest in U.S.
  • Gasoline Diesel and Crude Oil Prices
  • Brent vs. WTI Crude Oil - What is the Difference
  • What is RBOB Gasoline
  • RBOB Gasoline Futures
  • RBOB Gasoline - Get in on the action
  • What is RBOB Gasoline
  • How to Invest in Crude Oil
  • Senior Accounts Manager Patrick Bates Strong on Long Gold
  • Offshore Investment
  • Gold Options Explained
  • Gold Prices Rise Towards Fresh 10 Month High as Dollar Slips
  • Gold Outlook 2019: How to Profit From Last Years Slide
  • Long Gold Is Goldman Sachs Favorite Commodity Play Right Now
  • How To Buy Gold Options
  • How can I buy oil as an investment
  • What is Offshore Investing
  • How the Oil and Gas Industry Works
  • The gold standard - All you need to know.
  • Liquefied Natural Gas - Game Changing Energy Trends For 2019
  • Natural Gas Production - Game Changing Energy Trends For 2019
  • Heating Oil Futures Option Trading primer
  • Deepwater Drilling - Game Changing Energy Trends For 2019
  • Energy Storage - Game Changing Energy Trends For 2019
  • Geopolitical Risk - Game Changing Energy Trends For 2019
  • Red Maple helps you ONLY buy stocks going up in price