The recent surge in gold prices has been fierce!
On the afternoon of October 30th Beijing time, international gold prices surged significantly, with spot gold prices reaching a new historical high of $2780 per ounce. Since October, spot gold prices have risen by nearly 6%. Since the beginning of the year, the cumulative increase in spot gold prices has exceeded 35%.
Just now, international investment bank Goldman Sachs raised its gold target price: it is expected that by early 2025, the gold price will reach $2900 per ounce, higher than the previously predicted $2700; It is expected that by December 2025, the price of gold will reach $3000 per ounce.
Analysts believe that the recent acceleration of the upward trend in gold prices is related to various factors. Firstly, the uncertainty of the US presidential election has sparked investors' demand for safe haven; Secondly, the gold purchasing volume of central banks around the world, especially those in emerging markets, has surged; In addition, global central banks have started a cycle of interest rate cuts, and the interest rate environment is favorable for gold.
Gold prices hit a new historical high
Recently, gold prices have continued to rise, with spot gold rising again today after a surge of over 1% yesterday. As of around 14:48 Beijing time, spot gold prices were reported at $2789 per ounce, with a intraday increase of 0.54%. COMEX gold reached a new high of $2800 per ounce, with a intraday increase of 0.7%.
The uncertainty of the global economy and geopolitics provides support for the price of gold. Currently, the market is weighing a report: the job vacancy and labor mobility survey data released by the US Bureau of Labor Statistics on the 29th shows that as of the end of September, the number of job vacancies in the United States has dropped to 7.44 million, lower than August's 7.86 million, the lowest level since January 2021, and layoffs have increased, indicating a slowdown in the labor market and intensifying market expectations for future interest rate cuts by the Federal Reserve. The above data is contrary to the data disclosed in September, which showed that the job market remained strong, prompting traders to reduce their bets on another significant interest rate cut by the Federal Reserve. Higher borrowing costs are usually unfavorable for gold prices.
Traders will closely monitor more US economic data, including inflation and employment data, to be released later this week before the Federal Reserve's next policy meeting on November 6-7, which may provide clues for the Fed's loose policy trajectory before 2025. These reports will demonstrate the potential resilience of the economy and the stagnation of the job market after two hurricanes. Economists currently predict that the Federal Reserve will cut interest rates by 25 basis points next week.
Supported by central bank buying and safe haven demand triggered by conflicts in the Middle East and Ukraine, gold prices have surged by over one-third this year. There is less than a week left until the US presidential election, which is also a focus of investors' attention. The uncertainty of the election results highlights the role of gold as a safe investment place for investors.
Suki Cooper, an analyst at Standard Chartered Bank, said in a report: "Prior to the US election, the market's position in gold increased due to expectations of further interest rate cuts by the Federal Reserve and increased market and geopolitical uncertainty. If Trump wins, the market will focus on the impact of broader tariffs and the inflationary pressures they bring
Peter Grant, Vice President and Senior Metals Strategist at Zaner Metals, stated that as geopolitical tensions and political uncertainty persist, gold is supported by safe haven bets. Kelvin Wong, Senior Market Analyst for OANDA Asia Pacific, said, "Gold largely depends on the outcome of the US election... In the short term, spot gold will face resistance at $2800, followed by $2826.
Goldman Sachs expects gold prices to rise to $3000 next year
Currently, the market expects a 98% chance of the Federal Reserve cutting interest rates by 25 basis points in November. Han Tan, Chief Market Analyst at Exinity Group, said, "The risk of the US presidential election continues to affect market sentiment, while expectations of a Fed rate cut remain unchanged. Gold should maintain an upward trend and may even touch $2800 in the coming days
A Reuters poll shows that as the favorable interest rate background and geopolitical tensions in the United States continue to enhance its attractiveness, the rebound in gold prices will continue until 2025.
With the increasing probability of Trump winning the election, investors are concerned about the future economy of the United States. Multiple recent polls show that Trump is ahead of Harris, and the gambling market is betting that Trump can win "easily". Trump's proposal to impose tariffs and reduce taxes for businesses is bound to increase the budget deficit and further support gold prices.
It is worth noting that international investment bank Goldman Sachs has just raised its target price for gold. In a latest report, Goldman Sachs predicts that by early 2025, gold prices will reach $2900 per ounce, higher than the previous forecast of $2700. This optimism is largely attributed to the surge in gold purchases by central banks, especially those in emerging markets. In addition, Goldman Sachs expects gold prices to rise by about 10% to reach $3000 per ounce by December 2025.
Gold is usually closely related to interest rates. As an asset that does not provide any returns, its attractiveness to investors usually decreases when interest rates are high, and it is usually more popular when interest rates are low. Goldman Sachs research analyst Lina Thomas wrote in her team's report that while this relationship still exists, central bank purchases have always been a powerful force.
Concerns about the risk of financial sanctions may be one of the reasons why the central bank is increasing its gold purchases. Goldman Sachs said that since the Russia-Ukraine conflict in 2022, when the United States and Europe froze the assets of the Russian central bank, the number of emerging market central banks buying gold has increased significantly.
Goldman Sachs also stated that as the US presidential election approaches, Western investors are returning to the gold market. Gold may provide benefits in hedging against potential geopolitical shocks, including the potential escalation of trade tensions, subordination risks for the Federal Reserve, and debt concerns. Goldman Sachs expects that as interest rates decline, the gold holdings of Western exchange traded funds will gradually increase, consistent with their historical relationship.
The "Global Gold Demand Trends Report for the Third Quarter of 2024" released by the World Gold Council on October 30 shows that the total global gold demand for the third quarter of 2024 was 1313 tons, a year-on-year increase of 5%. Due to the consecutive record high gold prices in the third quarter, the total demand for gold denominated in US dollars has exceeded 100 billion US dollars for the first time, a year-on-year increase of 35%, setting a new historical record. It is worth mentioning that the significant inflow of global gold ETFs was the main factor driving the growth in gold demand in the third quarter. A gold ETF is a fund traded on a stock exchange that tracks the price of gold and invests in physical gold, reflecting to some extent the activity level of global gold trading and the demand for physical investment.
Data shows that in the third quarter, the net inflow of global gold ETFs reached 95 tons, which is in sharp contrast to the significant net outflow of gold ETFs in the third quarter of last year.