“Risk of high correction”: Bofa sounds from alarm to alarm as the price exceeds $ 4,000 per ounce

As Fortune Reported, Goldman Sachs is still optimistic, calling for gold to reach $ 4,300 an ounce by the end of 2026, while Mark Haefele d’UBS agrees that gold will remain essential coverage. Deutsche Bank thinks that the gold rally shows that, basically, investors are afraid.

Research Bank of America is not so optimistic, the Paul Ciana technical strategist writing on Monday that investors should be wary. “The risk of high correction,” he wrote in a market analysis seeking to answer the big question in the middle of another government closure: “Can something stop the gold rally?” The answer is yes, of course. A “variety of technical signals and technical conditions for several calendars warns against upward exhaustion,” noted Ciana.

Ciana has recognized that if macroeconomic stress and geopolitical tensions have channeled the “safe refuge” in gold, the trajectory has become precarious as the speculative positions swell. The recent increase is increasingly reflecting the fundamentals of purchase focused on the momentum rather than the underlying fundamentals, underlined the CIANA, raising the risks of a lively reversal of the transmission of feeling or the surprise monetary policy the market. He cited stretched graphics, “over -racket” signals and positive divergences, warning that the markets could see a correction if support factors weaken or reversed.

The long history of gold gatherings

Gold has reached several targets up to Ciana, more recently $ 3,880. A “relevant peak can be close” because gold was negotiated at around 20% above its simple 200-day mobile average from Monday, with major peaks in August 2020, August 2011, March 2008 and May 2006 occurring when prices were around 25% above this average.

Since he struck stockings in 2015, he noted, gold has gathered around 85% in 2020, corrected around 15% in 2022, then rallied 130%. While adolescents who, more upwards in the next two years, are certainly possible and this boom is smaller than the booms of the 1970s and 2000s, Ciana sees a “rhyme” with several “half-chemin corrections” in 2020-222, 2007-2008 and 1975-1976.

In a zoom further around the 19th century, Ciana notes that the Boom de l’Or of 1862-1864 won 156%, but then abandoned this advance in the bust that followed. Booms since the 1930s have not completely shrunk, he added, thinking about his history book.

Or is there much more room to run?

This is a very different perspective of the same within Bofa, with a different team at the bank which cracks several weeks ago to say that gold may not be almost reached its limits. The world raw material research team led by Michael Widmer argued that the ascent of Gold to $ 4,000 was not a surprise. With inflation of more than 2% and the monetary policy of fed fed up, gold has never “decreased” in such a scenario since 2001, the Widmer team argued on September 15.

Widmer noted that the total market capitalization of the world gold sector had made this point over $ 550 billion to this point last month, almost double the peaks observed in 2011 and 2020, more than eight times the 2016 low cycle, and more than three times the recent low cycle in 2022. Still, well removed from a different perspective, as a part of the Metal “Good below” of its previous perspective. The sector amounted to 0.39% of world market capitalization, still well below the 0.71% summit of 2011.

Where Widmer and Ciana seem to agree, however, it would be how gold has moved. Widmer’s price target of $ 4,000 was for 2026, after all, and gold ended on Monday at $ 3,984.40.

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