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Gold prices (XAUUSD:CUR) (NYSEARCA:GLD) are predicted to rise higher than previously anticipated, as emerging-market central banks continue to accumulate real assets amid geopolitical uncertainties, according to analysts at financial-services firm Goldman Sachs in a report on Friday.
Gold prices have surged more than 20% in the last two months, reaching a record high of over $2,400 per ounce due to concerns about potential conflicts in the Middle East, such as Iran’s potential attack on Israel.
The analysts at Goldman Sachs have increased their year-end target for the precious metal to $2,700 per ounce from the initial forecast of $2,300 per ounce.
This surge in gold prices has been attributed to new incremental factors, notably a significant rise in emerging-market central bank accumulation and increased Asian retail buying, as mentioned by Nicholas Snowdon, an analyst at Goldman Sachs in an April 12 report.
Insights into Gold Trends
Snowdon suggests that viewing gold as a barometer for fear and wealth can be insightful. The fear element in gold prices can be tied to cyclical or structural factors, reflecting changes in confidence in the global monetary system.
According to Snowdon, the correlation between gold prices and real rates is a key factor to consider. A shift towards real assets is signaled when gold and rates rise together, indicating a change in risk preference.
Factors Affecting Gold’s Momentum
Goldman Sachs outlines four major developments that could potentially dampen the demand for gold. These include a decrease in central bank buying in emerging markets, resolution of geopolitical tensions, support efforts in China’s property sector, and a hawkish stance by the Federal Reserve to combat inflation.
The analysis concludes that the near-term likelihood of these developments affecting gold prices significantly is low, leading to a continued bullish momentum in gold prices, according to Goldman Sachs.
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Marco_de_Benedictis/iStock via Getty Images
Gold prices (XAUUSD:CUR) (NYSEARCA:GLD) are predicted to rise higher than previously anticipated, as emerging-market central banks continue to accumulate real assets amid geopolitical uncertainties, according to analysts at financial-services firm Goldman Sachs in a report on Friday.
Gold prices have surged more than 20% in the last two months, reaching a record high of over $2,400 per ounce due to concerns about potential conflicts in the Middle East, such as Iran’s potential attack on Israel.
The analysts at Goldman Sachs have increased their year-end target for the precious metal to $2,700 per ounce from the initial forecast of $2,300 per ounce.
This surge in gold prices has been attributed to new incremental factors, notably a significant rise in emerging-market central bank accumulation and increased Asian retail buying, as mentioned by Nicholas Snowdon, an analyst at Goldman Sachs in an April 12 report.
Insights into Gold Trends
Snowdon suggests that viewing gold as a barometer for fear and wealth can be insightful. The fear element in gold prices can be tied to cyclical or structural factors, reflecting changes in confidence in the global monetary system.
According to Snowdon, the correlation between gold prices and real rates is a key factor to consider. A shift towards real assets is signaled when gold and rates rise together, indicating a change in risk preference.
Factors Affecting Gold’s Momentum
Goldman Sachs outlines four major developments that could potentially dampen the demand for gold. These include a decrease in central bank buying in emerging markets, resolution of geopolitical tensions, support efforts in China’s property sector, and a hawkish stance by the Federal Reserve to combat inflation.
The analysis concludes that the near-term likelihood of these developments affecting gold prices significantly is low, leading to a continued bullish momentum in gold prices, according to Goldman Sachs.
