Speaking at The Dubai Precious Metals Conference in the United Arab Emirates, Parilla said central banks are helping to create a “perfect storm” and that by continuing to push and test the limits of monetary policy credit markets they could push gold prices above $3,000 per ounce within three years, Khaleej Times reports.
“The big problem is that monetary policy is contagious and central bankers no longer have any bullets left (…) [They] have no room to ease aggressively as they are already stretched,” he was quoted as saying.
Independent research company Capital Economics also predicts that gold’s rally this year is far from being over.
“In particular, we expect building inflationary pressures in the US to keep real interest rates low, boosting the attractiveness of gold as a store of value. What’s more, physical demand and supply dynamics should also play in favour of higher gold prices as global mine output is expected to plateau in 2016, after seven years of consecutive growth, and demand from central banks and key consumers should remain strong”.
Capital Economics sees gold at $1,350 by the end of the year with a rising trend in 2017.
Gold prices have climbed in recent weeks amid expectations the US Federal Reserve would be more cautious raising interest rates this year.
At its March policy committee meeting, the Fed said it expected to raise rates two times this year, down from the four times it previously expected, amid concerns about the global economy. Higher rates make gold less attractive compared with yield-bearing assets.
The Fed’s gradual rate hikes have also weighed on the US currency, making dollar-denominated gold more attractive to other currencies holders.