PRECIOUS-Gold bursts through $2,000/oz barrier to new record

* Gold needs a period of consolidation -technical analysts

* Silver rises to more than 7-year high

By Eileen Soreng

Aug 5 (Reuters) – Gold soared to a record high on Wednesday as a weakening dollar, falling returns on U.S. bonds and a break above historic resistance at $2,000 an ounce added momentum to buying by investors seeking a safe store of value.

As the COVID-19 pandemic has roiled markets, gold has gained nearly 35% this year and is one of 2020’s best performing assets.

Investors fear economic stimulus unleashed in response to the pandemic will trigger inflation, devaluing other assets, and keeping bond yields historically low, which enhances the appeal of non-yielding gold.

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Gold may eclipse dollar as reserve currency after outsize coronavirus spending: Goldman Sachs

The U.S. dollar’s longstanding status as the world’s reserve currency is at risk after the greenback’s weakening by unprecedented government efforts to shore up the economy during the COVID-19 pandemic, according to Goldman Sachs Group Inc.

Ballooning federal debt levels and a potential shift in favor of inflation at the Federal Reserve amid increased geopolitical hostilities, domestic unrest and an onslaught of new COVID-19 cases are among the headwinds the greenback faces, according to the firm’s strategists.

“Real concerns around the longevity of the U.S. dollar as a reserve currency have started to emerge,” wrote a team of Goldman strategists led by Jeffrey Currie.

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Gold: Set to test $2300 over next 12 months – Citibank

Analysts at Citigroup have revised up their gold-price forecasts across the time horizons, given the latest relentless rise in the yellow metal to fresh record highs of $1981.34.

Key quotes

“Still further to go, short-term target $2,100, then $2,300 in 6 to 12 months.”

“Prices seem biased to stay higher for longer, with 2019-2020 emerging into a unique bull regime for the yellow metal.” 

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Goldman Sachs has a new blowout forecast for gold

Critical information for the U.S. trading day

A weaker day is setting up for stocks on Tuesday, as optimism over U.S. stimulus progress and vaccine news starts to fade, and attention turns to the start of a two-day Federal Reserve meeting.

The asset that stole the show on Monday, of course, was gold GCQ20, 0.69%, which climbed to $1,931 an ounce, the highest settlement in history. That juiced the crowd expecting $2,000 an ounce soon, and leads us to our call of the day from Goldman Sachs, which has ditched its own $2,000 forecast and says we’re going to see $2,300 an ounce in the next 12 months.

The bank also lifted its silver outlook to $30 from $22 an ounce.

Driven by “a potential shift in the U.S. Fed toward an inflationary bias against a backdrop of rising geopolitical tensions, elevated U.S. domestic political and social uncertainty, and a growing second wave of COVID-19 related infections,” gold’s surge to new highs lately has outpaced gains for real rates and other alternatives to the dollar, said a team of analysts led by Jeffrey Currie.

“Combined with a record level of debt accumulation by the U.S. government, real concerns around the longevity of the U.S. dollar as a reserve currency have started to emerge,” said the team.

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