BNP Paribas Targets $5,000 Gold in 12 Months, Citing Dollar Weakness
BNP Paribas Wealth Management sees gold at $5,000 an ounce within a year from now, targeting more than 20% price growth. Central bank buying, returning ETF flows and an expected dollar decline, underpin the call.
Gold has climbed to around $4,300, before correcting slightly below that level, and BNP Paribas Wealth Management believes the rally still has enough space to continue.
"We have a target of 5000 in the next 12 months," Shafali said in an interview, as the bullion traded about 0.8% higher. Easing geopolitical stress, after reported Iran-Oman negotiations on a shipping accord kept WTI price just under $80 a barrel, helped support the sentiment.
Shafali noted that dollar strength and rate-hike fears had kept gold lagging the bullish setup analysts predicted at the beginning of the year. USD had gained a few percents recently, but now it's giving some of that return back to the market.
BNP's demand case rests on two pillars. On the official side, 89% of central banks surveyed by the World Gold Council said they expect to raise their gold allocation, Shafali said, and the bank expects retail ETF flows to return as geopolitical tensions cool. Gold-related ETFs themselves have seen positive inflows in the month of June, strengthening BNP's prediction. Strong ETFs like GLD ETF and GDX ETF may benefit the most from the price action of gold if it can keep its bullish momentum.
Related assets: Gold, Silver, Palladium, Platinum