The US Bank believes that the purchasing force of central banks and ETF funds against the risk of recession can pull gold to 4,000 USD next year.
Last week, world gold price increased to 6.6%, equivalent to more than 200 USD per ounce. Instability in the global financial market pulled over $ 3,200 for the first time in history. The morning price of April 14 also made a new peak at $ 3,245 per ounce.
This development caused many banks to continue raising the precious metal price forecast. Analysts at Goldman Sachs expect the price of gold at the end of this year to $ 3.700 per ounce. In the middle of the next year, the price can be 4,000 USD.
World gold price movements in the past year. Graph: Goldprice
The demand of central banks is stronger than the forecast and the ability of gold to hide from the risk of recession and geopolitical risks will continue to pull prices up to high this year. Analysts at Goldman Sachs argue that the golden demand of central banks may be on average 80 tons per month. Their old estimate is 70 tons. The increased risk of economic downturn will also cause golden ETFs to buy precious metals.
“The recent transaction development shows that investors’ shelter demand is increasing, in the context of high risk of recession and the price of risk assets go down,” Goldman Sachs said. Currently, this bank is forecasted that the US probability of recession in the next 12 months is 45%. If this scenario occurs, “Gold ETFs will accelerate the purchase, pulling the price up to $ 3,880 later this year.”
Meanwhile, analysts at UBS believe that the price will be 3,500 USD by December 2025. Last month, both UBS and Goldman Sachs have raised gold price forecasts, due to the unstable policy environment in the US.
UBS forecasts that demand will be stronger in many segments, from the central bank, investment funds to individual investors. “The prolonged instability is increasing the demand for diversification of the portfolio, which is beneficial for gold,” analysts at UBS said.
However, gold prices may fluctuate more strongly in the near future, due to liquidity in the market thin. Part of the reason is that the golden supply from exploitation increases slowly and the large amount of gold is in the hands of central banks and ETF funds.