Gold price projections in August 2020

Following the model developed by the AXL Capital Management team, this report provides the projected levels of gold prices for August 2020.

For August, the model indicates an upper limit of 2,077 US$/Oz and a lower limit of 1,898 US$/Oz. On average, the model shows 1,987 US$/Oz.

The economic reactivation plan in July exceeded analysts' expectations adding 1.8 MM Vs. 1.6 MM expected, and unemployment claims decrease week by week (1.31 MM). US COVID-19 infections reached 3.8 MM versus the previous month's report, which indicated 3.1 MM and 160,737 Vs. 133,420 previously reported deaths.

At AXL Capital, we believe that the uncertainty in the coming months will be the presidential elections in the USA, which would favor gold prices in the short term. In the medium term, the money injected by the Federal Reserve (more than 2.8 trillion US$) could generate inflation. For which reason, Gold will continue to be appreciated and valued as the preferred refuge asset.

Talks in Washington on the second economic stimulus package remain at a standstill, which encouraged gold prices in the first week of August to exceed 2,000 US$/oz.

Chart #1: The price of Gold surpassed the level of 2,000 US$/oz on August 4, 2020.

The monthly tracking of model estimates and gold prices from January 2018 to June 2020 for all values at the end of each month is within the cost estimates. To date, the model operates within its 90% confidence limits.

Chart #2: Tracking model results vs. actual gold price data, monthly closing (10 am LBM) January 2018- July 2020.

It is necessary to point out that in the daily tracking for July, the upper limit issued by the model 1,877 US$/oz was broken upwards since 23/07, as shown in the attached graph with daily values of gold prices issue by the London Bullion Market (LBM).

Chart #3: Tracking model results vs. actual daily data gold price. Gold breaks the upper limit of the model on July 23rd and heads towards 2,000 US$/oz.

The revision of the estimated average estimation error issued by AXL Capital's model for July 2020 versus the actual average reported by the LBM (10 am) is -3.2%: 1,788 US$/oz estimated Vs. 1,846 US$/oz actual. The above is within the model's error acceptance range.

Conclusion

AXL Capital Management's econometric model projects for August an upper level for gold prices of 2,077 and a lower level of 1,898. The monthly average would be around 1,987 US$/Oz.

Gold continues to be the preferred refuge asset in times of uncertainty like the present on August 4th, the price surpassed the level of 2,000 US$/oz and surpassed its historical highs for 2011.

On August 7th, US macroeconomic data on employment generation was better than expected (1.76 MM Vs. 1.6 MM), and Gold fell from 2,060 to 2,020 US$/oz. Potentially, approval of the second package of stimuli to the US economy, currently being discussed in the US Congress, could make Gold fall back in the quite short-term.

At AXL Capital we believe that the high debts assumed by companies -and countries- due to COVID-19, the money injected into the US economy through QE by the Federal Reserve which increased its balance sheet from January 2020 by 4.1 trillion US$ to 6.9 trillion US$ as of the date of this report.

Currently, there is a high potential risk of inflation in the future, and together with the November 2020 presidential elections in the USA, they are the almost perfect amalgamation to maintain and increase the levels of uncertainty in the short and medium-term.

For this reason, gold was keeping wait to continue searching for new historical records.

Says goodbye to you,

Yro S. Cortez Ramos

Mining Business Development Manager

AXL Capital Management

yro.cortez@axlcapitalmanagement.com

Disclaimer: The results issued by AXL Capital Management are carried out with a deep level of analysis, however, they are subject to potential global macroeconomic variations that have a high level of uncertainty, so those results must be used only for information and do not represent purchase recommendations. / sale or short, long-term investments for the global Gold market, its derivatives, ETFs, or shares of mining companies or any other type of investment.