Druckenmiller said he dipped back into gold in December and January. His rationale is fairly simple. “I wanted to own some currency and no country wants its currency to strengthen,” He continued: “Gold was down a lot, so I bought it.”
It's been a rough start to May for gold, so far. Goldman says $1200 an ounce is possible due to several reasons.
“The main catalysts for further very near term downside in gold, in our view, is a repricing of U.S. rate increases (higher) and a QE reduction (faster), on the back of an increased expectation of U.S. tax reform or infrastructure delivery (cuts) or solid U.S. and global economic growth,” they say in a note to clients.
The Goldman team expects a “moderately lower” shift for gold in the next three months, down to $1,200 an ounce.
“Over the medium term, we would see any significant further pullback in gold as a buying opportunity as our 12-month target remains $1,250 an ounce,” the analysts say.
In late June, Goldman's asset strategist came out with another note outlining three specific reasons why gold may trade above the asset team's year-end target price of $1,250.
Lower returns in U.S. equities should support more defensive asset classes, thus gold.
Higher GDP from EMs should add purchasing power to EM economies that have a high propensity to consume gold.
Goldman Sachs expects gold mine supply to peak in 2017.
Bridgewater Associates founder Ray Dalio says in a LinkedIn blog post "risks are now rising" in the market and recommends gold as a hedge.
He cited increasing geopolitical tensions between the U.S. and North Korea.
Among the catalysts will be lower long-term interest rates and the failure of the president to deliver on promised economic reforms, says BAML's global head of commodities research Francisco Blanch.
The Fed's rate hikes are drawing a lot of attention, he says, but that's the short end of the curve. At the long end, rates are falling.
He sees gold climbing to $1,400 per ounce by early 2018.