Bank of America expects gold price to rise to $1,400

Gold prices are set to reach a level of $1,400 per troy ounce early next year, supported by lower interest rates in the United States and the lack of progress on President Trump's planned economic reforms.

That's according to Francisco Blanch, head of the commodities research department at Bank of America Merrill Lynch, in an interview with Bloomberg.

"The Federal Reserve is not tightening monetary policy as fast as expected, while the European Central Bank is about to start tapering. That will eventually lead to a rise in the euro, which, combined with stagnant long-term interest rates in the United States, is beneficial for gold.

The ECB now wants to start tapering the stimulus, without resolving the structural problems in the Eurozone. So from a gold perspective, we're in a cycle that we probably bottomed out a few months ago."

Gold price above $1,300

The Gold price In dollar terms, it has already risen more than ten percent this year due to a weaker dollar and increased geopolitical risks. The missile launch by North Korea at the beginning of this week sent the price of the precious metal soaring to more than $1,320 per troy ounce, the highest level since November last year. Meanwhile, the euro rose to $1.20 against the dollar, its highest level since early 2015.

The development of the gold price in recent days was also reason for analyst Georgette Boele of ABN Amro to adjust her price target upwards. Before the end of this year, it raised its price target from $1,210 to $1,300 per troy ounce, while it sees the price of the precious metal rising even further to $1,450 per troy ounce next year.

According to analyst Evgeny Ananiev of VTB Capital, the second largest lender in Russia, gold prices could reach $1,400 per troy ounce this year due to the North Korean threat and gold purchases from China and India.