Gold bear Goldman Sachs forced to raise price target by $100 as Brexit carnage deepens

Financial markets remain in deep turmoil Monday after the United Kingdoms historic vote for Brexit last week. One high-profile exception: gold.

The federal governments trading data show that money managers long bets on gold hit an all-time high just days before the Brexit referendum, and those wagers have paid off, with the metal is now up about 25% on the year thanks to an explosive price surge after the vote.

And golds run isnt over yet, experts say. The yellow metal could hit $1,424 by the end of 2016, according to one Bloomberg poll of industry players.

That number is no surprise to anyone who has been watching golds standout performance this year, and major investment banks such as ANZ, HSBC, and Societe Generale all predicted that bullion could top $1,400 if the Brexit agenda prevailed on June 23.

And Bank of America Merrill Lynch also sees gold as a winner amid the Brexit fallout, with analyst Michael Hartnett saying that higher levels of gold, volatility & cash will benefit.

Goldman ups call to $1,300: Now it looks like one major gold skeptic is having to sound the retreat on its longstanding bearish call. Arguing that spillovers into the U.S. rate markets and the flight-to-safety sentiment are likely to be more persistent because of the Brexit, Goldman Sachs just upgraded its three-month price target by a whopping $100, from $1,200 to now $1,300. It also increased its six-month prediction by $100, from $1,180 to $1,280, as well as its 12-month forecast from $1,150 to $1,250.

The ultimate trajectory will depend on the intensity and duration of the uncertainty shock created by the leave outcome and any potential revisions to the U.S. growth outlook, both of which remain highly fluid in the current context, Goldman analysts wrote.

Top Goldman economist Jeffrey Currie appeared on CNBC on Monday to grudgingly concede that we would view gold as a very good hedge for the type of political uncertainty we expect to see.

Fed rate expectations fade: And significantly, Goldman seems to think that the Federal Reserve wont be raising interest rates at all for quite some time. In gold, the sharp rise in prices has been entirely consistent with the move in U.S. 10-year Treasury yields, as the Fed Funds market has pushed a U.S. rate hike now into 2018, the analysts wrote.

Wow. Just about three months ago gold tumbled on the prospect of at least two more imminent rate hikes this year. Now, with Mays disastrous jobs report working in tandem with Brexits still-unpredictable and ongoing carnage in the financial markets, rate-hike odds are now receding into the distant sunset. That means, conversely, that golds future is now even brighter. Look for Goldman to polish its bullion forecasts in coming months if the contagion from Brexit continues to deepen and spread.