In the Spotlight: Gold
7 May 2021
CME Group cut margin requirements on COMEX Gold Futures by 9.1%, with the new rates to take effect after the close of business on Friday.
The change comes as Comex gold futures drop to the lowest since June amid rising bond yields.
Gold seems to be in for more gains, having broken out of its 8-month vicious spiral.
Gold displayed a double-bottom pattern in the first quarter of 2021 following an 18% decline from the August 2020 peak, with the rebound starting near a key Fibonacci support zone.
Furthermore, we note that the Bitcoin/Gold ratio that we track is plateauing at the 32 levels after a record run from the fourth quarter of 2020. What this implies is that Bitcoin seems to be consolidating at around the US$1 trillion market capitalisation while fund flows are turning to Ethereum and gold.
Overall, we expect more upside to gold prices. Street estimates are also constructive on gold prices going into 3Q 2021, with a median price target of US$1,800/oz and the highest target of US$1960/oz (by BNP Paribas).
Consensus estimates for Gold in 3Q 2021:
| Firm | 3Q 2021 Gold Price Target (US$/oz) |
|---|---|
| Jefferies LLC | 1850 |
| Deutsche Bank | 1600 |
| Commerzbank | 1900 |
| CIMB | 1850 |
| Capital Economics | 1645 |
| Westpac Banking | 1837 |
| ABN AMRO Bank | 1738 |
| BNP Paribas | 1960 |
Gold Prices (5-years) – Double Bottom
Bitcoin/Gold Ratio (1 year)
Bitcoin vs Gold (year-to-date)
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