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(Kitco News) Gold will see its best 2020 quarter this spring, but prices will peak just below $1,700 an ounce, according to BNP Paribas.

Even though the COVID-19 outbreak has forced BNP Paribas to revise up its 2020 gold price by nearly $100, it still sees the precious metal topping at $1,675 an ounce this year.

The price forecast is quite conservative, with gold averaging $1,675 in Q2, $1,610 in Q3 and then declining further to $1,550 in Q4. And in 2021, BNP Paribas projects a mere average of $1,500 an ounce.

“We have conservatively revised our positive gold price forecasts issued on 19 March, and now see gold averaging USD1610/oz (USD+90/oz) in 2020,” French international banking group said. “In 2021, on our view that economic conditions will progressively return to normal and inflationary pressures will remain subdued, we see gold averaging lower, at USD1500/oz.”

At the same time, BNP Paribas highlighted that gold will continue to appeal to investors looking for safety during such uncertain times. Increased demand will also remain strong as investors fret over a global economic slowdown triggered by all the COVID-19 shutdowns.

“The recessionary fallout of the COVID-19 outbreak on the global economy suggests investors are likely to continue to seek refuge in gold,” said BNP Paribas commodities economist Harry Tchilinguirian and head of macro quantitative and derivatives strategy Michael Sneyd.

Also, the massive quantitive easing by global central banks and the unprecedented fiscal stimulus boost the incentive to hold gold.

“With the Federal Reserve moving its policy rate to the lower bound and turning to unlimited quantitative easing, and other banks taking similar action, we expect real rates to remain in negative territory as nominal yields are suppressed. This raises the incentive to hold gold, particularly in such an uncertain economic environment,” Tchilinguirian and Sneyd wrote on Monday.

Two significant elements capping gold’s gains going forward will be the U.S. dollar and more margin-call selling as people flock to cash during the coronavirus panic.

“A rise in the price of gold will be challenged by U.S. dollar strength in the short term, stemming from recent stress in USD funding and dislocations in credit markets that have led to the hoarding of cash,” the economists said. “In addition, gold’s role as a hedge in investor portfolios will be put to use in the case of losses in other asset classes, such as a strong correction in equity markets.”