Gold, usually used as a hedge in opposition to political and financial uncertainty, has been boosted by Russia’s conflict on Ukraine and hostilities within the Center East.
“We may see gold shifting in the direction of $2,600 or $2,700 … in the direction of the tip of the 12 months,” mentioned Amelia Xiao Fu, head of commodity markets at BOCI. “Now we have the US elections, there’s nonetheless loads of uncertainty.”
Rising expectations the US Federal Reserve will begin reducing charges in September have boosted the enchantment of safe-haven belongings akin to gold and US Treasuries, and undermined the greenback which has a destructive relationship with bullion.
“We nonetheless see very important worth in lengthy gold positions, and preserve our bullish $2,700 forecast for 2025. Fed fee cuts are poised to deliver Western capital again into the gold market,” mentioned Lina Thomas, commodities strategist at Goldman Sachs.
Robust help additionally comes from China, which purchased gold for its reserves for 18 consecutive months to April earlier than suspending its program attributable to elevated costs.
“Chinese language worth sensitivity insures in opposition to hypothetical giant worth declines, which might probably reinvigorate Chinese language shopping for,” Thomas added.
Additional contributing to the upsurge in gold costs is that traders have been piling into physically-backed gold change traded funds (ETFs), which recorded internet inflows final week of 8.5 metric tons, based on the World Gold Council (WGC).
“Fee cuts may see curiosity rate-sensitive traders return to gold through ETFs,” mentioned Ole Hansen, head of commodity technique at Saxo Financial institution.
(By Brijesh Patel and Sherin Elizabeth Varghese; Enhancing by Pratima Desai and David Holmes)