Gold just hit the highest level in 6 years and according to Goldman it is set to go much higher.

In a report by Goldman's Sabine Schels, the commodity strategist looks at the consequences of the ever-escalating trade war between the US and China, and sees nothing but upside for gold, if not the other industrial metals. As she notes overnight, "the metals complex has weakened significantly, with iron ore down 18% and copper down 4% since the latest US tariff proposal. While there was a softening in iron ore fundamentals, the vast majority of the move was macro related, with copper positioning making fresh lows. Underscoring that, gold prices surpassed our target of $1475/toz."

And with the yuan continuing to sink, as the PBOC is likely to deliver its first ever fixing below 7.00 tonight after the laughable 6.9996 on Tuesday, Goldman warns that a sharp CNY depreciation "could be highly disruptive, with the first order effect likely more dominant while the 2nd order effects may be much slower to take hold."

Goldman then estimates that a 10% depreciation in the broad-based CNY could spell as much as 13% downside to the industrial metals complex, but of course, that would be good news for gold prices, which have increased further as a weaker CNY sparked substantial US and global growth fears. And with growth worries likely to persist, gold is expected to rise sharply. As a result, Goldman has hiked its 3, 6, 12-month gold price forecasts from $1450, $1475, $1475/toz to $1575, $1600 and $1600/toz, respectively.

Therefore, Goldman upgrades its gold ETF forecast for 2019 from 300 tonnes to 600 tonnes. While Goldman does not expect a global recession, for now, "until DM growth improves and worries ease gold should continue to move higher." As such, it is upgrading its 3, 6, 12 month gold price forecasts from $1450, $1475, $/1475/toz to $1575, $1600 and $1600/toz, respectively. "At the same time, we see more upside in silver prices, too. When the push into gold is as strong as it now interest in silver tends to get reignited, too" and so Goldman upgrades its silver forecast from $15.4, $16, $/16/toz to $17.6, $18 and $18/toz, respectively.

Of course, gold could go even higher: as the Goldman analyst notes, "if growth worries persist, possibly due to a trade war escalation, gold could go even higher driven by a larger ETF gold allocation from portfolio managers, who still continue to under-own gold. Specifically we argued that 2019 gold ETFs build could reach the pace similar to Jan- Oct 2016, which is the last time DM growth was so low." Fast forward to today, when with the DM CAI persistently low, the trade war escalating, global equities selling off and volatility spiking, "it looks our risk scenario is playing out" Goldman admits. Indeed, "gold ETFs have recently built momentum almost as strong as in 2016 and we believe that can be maintained in the short term."

As Bloomberg calculates, bullion holdings in ETF climbed to the highest since April 2013. The precious metal climbed as much as 1.8% on Wednesday to $1,511.60 an ounce, the highest since April 2013.

To all this we would just add the following usual disclaimer: any time Goldman predicts one thing, the opposite happens...