Looking at the news and the media, there are few experts who speak of gold (GLD) as a short-term investment opportunity. Only in 2013, however, some analysts predicted that gold would go to 2000 dollars. Those expectations have not been met, of course, but gold bugs have been able to keep their spirits up (with good reason!) despite the negative sentiment in the market.

Citi on gold

Citi (C) analysts predicted last week that they do not expect much from gold this year, but that from 2016 onwards things will start looking a lot different. Gold is very vulnerable now, in their opinion, but the 2016-2020 period might prove to be very important for the yellow precious metal according to analyst Jon Berghtheil.

Much of gold’s weakness since 2012 can be explained by the absence of a strong inflation rate. Now that many central banks have implemented expansive monetary policies this might change, however. Printing money almost always results in a higher inflation rate, but with the current overcapacity of oil and its drop in price, inflation has been postponed.

U.S. dollar

Gold, which tends to move in the opposite direction of the U.S. dollar, has stood its ground in recent months, however, while the US dollar rallied. A strong US dollar makes commodities that are dominated by the dollar (such as gold) less attractive, because the price goes up for investors that do not work in US dollar.

Indexed for January 2014, we can see that silver, platinum, and base metals still form a narrow cluster against the US dollar index until April 2015. Gold has been a lone wolf this past year, however, and moved around without regard of other metals or the dollar as you can clearly see on the chart below.

The Citi analyst expects gold to regain strength when the worldwide epidemic of printing money loses its luster and devaluations of currencies will bring about inflation in combination with oil prices that could stabilize throughout next year.