Wells Fargo on Gold: “We Still Like It”

Gold is already shining brightly in 2022, compared to other investment asset classes. Yet, new research reports from the Wells Fargo Investment Institute and BofA Global Research reveal that gold has more room to run on the upside.

Let’s take a quick look at recent market performance. Through late April, gold is up 6% year-to-date, while the S&P 500 is down 6%, and the tech-heavy NASDAQ is down over 13%. Ten year Treasury yields nudged up recently as bond prices fell, but still only return a 2.91% yield.

Hands down, gold is performing well this year. But, according to new research, the best may be yet to come for gold and silver.

The Wells Fargo Investment Institute couldn’t be clearer on gold: “We still like it,” John LaForge, head of real asset strategy wrote in an April 18 report to clients.

What does Wells Fargo’s LaForge see as appealing? First, the fundamentals for gold look strong, especially on the supply side, he notes.  Historically, when supply drops below the 5-year average (like it is right now), it has been a positive sign for gold prices ahead, opening the door to a multi-year gold price rally.

Second, as equity and fixed-income markets struggle in early 2022, Wells Fargo believes that “investors are actively looking for assets that can add diversification to portfolios.” They name gold as a store-of-value asset at the top of the list. Wells Fargo pegs a 2022 year-end gold price target in the $2,000-$2,100 range.

Analysts at Bank of America are also upbeat on the prospects for gold this year. According to a BofA Global Research report, the firm forecasts gold gains to $2,175 an ounce and silver to $30 an ounce.

What’s more? The recent retreat from above $2,000 offers investors a buying opportunity. “We like longs / buying dips near $1940/50 for tactical trades and if above $1888/oz for medium term trades,” the BofA Global Research report said.

Take a look at where gold is trading now. If you act quickly, there is still time to add to your tangible assets allocation at a price level that provides value and long-term price appreciation.

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