In a research note Thursday, analysts at Bank of America Merrill Lynch highlighted its recent dip but said there were reasons for optimism. “While tighter monetary policy is not bullish, inflation and a range of uncertainties, including European elections and protectionism should support the yellow metal. As such, we see prices at $1,400 (per troy ounce) by year-end”.
The note further explained that following the initial sharp move on November 8 after the election victory of U.S. President Donald Trump, a number of market participants had taken a “wait and see” approach, suppressing volatility across asset classes.
“The decline in volatility across asset classes is particularly notable given some of the massive policy shifts currently under debate in the U.S. and Europe. In our view, the market seems to be ignoring the large and growing risks of U.S. or U.K. policy mistakes and the upcoming electoral cycle in Europe,” the report said.