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Gold futures climbed to yet another record high settlement Tuesday, with Citi predicting the yellow metal will climb to $3,000/oz in the next 6-18 months, adding to a list of Wall Street banks that have raised forecasts.
Channelling Rihanna, Citi analysts Aakash Doshi and Arkady Gevorkyan said gold will “shine bright like a diamond,” raising their year-end 2024 price target by 6.8% to $2,350/oz and making a “massive” 40% upward revision to $2,875/oz for 2025, while the $3K level is prefaced by regularly testing of $2,500 in this year’s H2.
Gold’s gain will be driven by increased flows from managed money players, who are already showing signs of catching up with demand from physical consumers in China and central banks, Citi said, adding the start of a Fed cutting cycle – or a potential recession scenario – heading into 2025 will provide further impetus for investment demand.
Deutsche Bank said Tuesday it sees gold prices at $2,400/oz by year-end 2024 and at $2,600 in December 2025.
“Gold is likely to remain on a strong footing as any profit-taking by early investors would be replaced by investment from those who have so far not participated in the move,” Deutsche Bank analysts say.
Front-month Comex gold (XAUUSD:CUR) for April delivery settled +1% to $2,390.80/oz, its fourth straight daily gain and its 19th record high settlement for 2024, while front-month April Comex silver (XAGUSD:CUR) finished -1.1% to $28.318/oz.
ETFs: (NYSEARCA:GLD), (NYSEARCA:GDX), (GDXJ), (IAU), (NUGT), (PHYS), (GLDM), (AAAU), (SGOL), (BAR), (OUNZ), (SLV), (PSLV), (SIVR), (SIL), (SILJ)
Gold’s resilience seems remarkable, but interest rates and Federal Reserve rate cut expectations have slipped in importance this year, BNP Paribas director of commodity strategy David Wilson says, with concerns over returning inflation, increasing geopolitical tension and underperforming Chinese property and equities driving gold’s rally.
“We believe the above-mentioned return of inflation fears, plus the more recent rise in geopolitical concerns, have seen funds significantly buying December 2024 gold call options of between $2,500 and $2,900 per ounce,” Wilson writes.
Insight on Gold Prices
The surge in gold prices is not only driven by traditional factors like interest rates but also by emerging concerns over inflation and geopolitical tensions. These additional factors have contributed significantly to the rally in gold prices, attracting more investors who are seeking to hedge against these uncertainties.
