Spot gold rose as high as $1981 in a surge early in Asian trading today but was hit hard in two waves of selling afterwards, knocking it down to $1907 at the lows. The dip buyers stepped in there and have lifted it back to $1934, down $7 on the day.
Goldman Sachs is adding to the bullish calls today, raising its 12-month forecast to $2300 from $2000 previously.
"Real concerns around the longevity of the US dollar as a reserve currency have started to emerge," wrote Goldman strategists in a note. "Gold is the currency of last resort, particularly in an environment like the current one where governments are debasing their fiat currencies and pushing real interest rates to all-time lows."
A key part of their bullish call is from the Fed, which is shifting to an inflationary bias. They may allow inflation to accelerate beyond 2%.
Given the backdrop, there is "a greater likelihood that at some time in the future, after economic activity has normalized, there will be incentives for central banks and governments to allow inflation to drift higher to reduce the accumulated debt burden," they said.
Reference: ForexLive
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