Goldman Sachs argues that gold has much more upside to come next year

Gold D1 13-11

The firm says that while gold may trade more rangebound in the next few months, there will be further upside in bullion as it is bought as a hedge against dollar debasement.

"The reflation story in 2021 will be supportive for gold by pushing near-term real rates lower even if longer-term real rates struggle to fall more."

Adding that it expects gold to be more sensitive to moves in shorter-term real rates, similar to how currency markets behave.

Besides that, the firm says that there is evidence of growing demand in large emerging market consumers and they see this trend continuing into next year. As such, it is maintaining a three-month, six-month, and twelve-month target of $2,300 for gold.

While you can't fault their long-term argument (for now at least), as this is largely riding on the back of the market pricing in a better risk outlook up against the backdrop of a multi-year decline in the dollar, the near-term narrative for gold remains questionable.

Gold has been consolidating in and around $1,900 lately and has fallen back below the figure level and below its 100-day moving average after the vaccine news on Monday.

Support at $1,855-63 is still keeping buyers poised but there is still a possibility of a deeper correction lower before more dip buyers step in closer to $1,800.