28.07.202109:35 Forex Analysis & Reviews: Credit Suisse: Gold will return to its 2020 records

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Exchange Rates 28.07.2021 analysis

Experts from the Swiss bank recently stated that the real value of gold bars at this stage is about $1,914. Credit Suisse experts came to this conclusion after evaluating the current market conditions, including the index of the US currency, which is trading below 100 points.

The fact that the precious metal is now undervalued is also indicated by the fact that last year, the price of gold was about $2 thousand with the same low yield of US bonds.

Recently, the yield of 10-year bonds has shown mainly negative dynamics. Moreover, Credit Suisse believes that the real yield is now much lower than last year's levels.

Nevertheless, this has little effect on the value of gold. Currently, the asset almost does not benefit from new interest rate lows, but it shows a stronger dependence on other factors.

As proof, we will give an example: On July 27, the yield of 10-year bonds declined to 1.12%. The yellow asset would have reacted to this with a sharp growth, but during yesterday's trading, it moved slowly in a very narrow price range.

At the end of Tuesday's session, the precious metal rose by only 0.03%, or 60 cents, stopping at $1,799.80. According to analysts, gold has been trading near a 3-week low for 2 consecutive sessions, due to uncertainty around the US Fed meeting.

From the two-day meeting, which should end today, investors are waiting for additional and more distinct comments on the future course of the Fed's monetary policy. If the regulator hints at a possible curtailment of incentives and an early termination of bond purchases, gold may fall even more.

Meanwhile, analysts from Credit Suisse believe that the Fed will continue to adhere to a soft monetary policy in the conditions of a difficult epidemiological situation. In turn, the "dovish" rhetoric should help the precious metal to break through the psychological mark in the near future and be above the level of $1,800 again.

In recent weeks, gold prices have declined, despite the fall in yields, but this is not expected to last for a long time, assuming a short-term increase in quotes. This is emphaszed by Swiss bank experts. Thus, we maintain our forecast: gold will be trading at the level of $2 thousand by the end of 2021. It's only a matter of time before its value reaches the record highs of last year.

As for the current dynamics of gold, it is positive. On Wednesday morning, the asset is already trading above the key level amid the expectation of the Fed meeting, where its Chairman Jerome Powell will be speaking.

Earlier, the value of the metal reached $ 1,805.85. Compared to yesterday's close, it rose $ 6.05, or 0.34%.

Exchange Rates 28.07.2021 analysis

At the same time, Silver's price also surged to $ 24,863. The asset gained 0.87%, albeit losing 2.6% in value yesterday.

Аlena Ivannitskaya,
Expert analitic al companiei InstaForex
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