Gold prices in Asia rose on Wednesday morning in Asia as stocks took a hit from the sharp drop in oil prices.
Gold futures were up by 1.11% at $1,706.60 by 11:17 PM ET (4:17 GMT), as Asian stocks reported losses for a second day in response to oil futures tumbling in the previous session. The yellow metal is seeing its prices restore its inverse relationship with stocks as investors seek safe havens amid the economic turbulence.
Bank of America raised its 18-month gold price target to $3000 an ounce, up from a previous $2,000 target, in its latest report “The Fed can’t print gold”.
Despite continued economic volatility that is affecting even safe havens such as gold, the bank remained bullish that the fiscal and monetary stimuli unleased by governments worldwide will offset the impact of the COVID-19 pandemic.
“As economic output contracts sharply, fiscal outlays surge, and central bank balance sheets double, fiat currencies could come under pressure,” BoA analysts said in the report. “Investors will aim for gold.”
But the reported also added, “Beyond traditional gold supply and demand fundamentals, financial repression is back on an extraordinary scale.”