94Ha Viewpoint
Analysts expect central banks to continue to increase their gold holdings. In addition, the market is concerned that US interest rates may rise further and geopolitical crises may cause international gold prices to fluctuate this week, but the overall trend is upward.
According to Bloomberg on Wednesday (November 20), UBS believes that gold prices are expected to rise to more than US$2,900 per ounce (about S$3,886.57) by the end of next year, which is consistent with Goldman Sachs’ previous forecast. The investment bank believes that as central banks expand their gold holdings, gold prices will rise further.
UBS analysts Levi Spry and Lachlan Shaw said in the report that due to the strengthening of the US dollar and market concerns that further implementation of fiscal stimulus policies in the United States may lead to higher interest rates, precious metals may experience a period of consolidation before entering the next wave of gains.
Analysts believe that gold prices will rise further to US$2,950 per ounce by the end of 2026. “The emergence of a ‘Red Sweep’, strong diversified buying interest and increased global uncertainty will continue to support prices,” they said in the report. “Against the backdrop of high macro volatility and unresolved geopolitical risks, continued strategic gold allocations and central bank purchases may drive gold prices higher.”
Gold is one of the strongest performing commodities in 2024, with prices hitting consecutive new highs. Since the beginning of this year, factors such as increased holdings by central banks, a shift in the Federal Reserve’s monetary policy, and geopolitical tensions in regions such as Europe and the Middle East have supported the continued rise in gold prices.
Currently, spot gold is trading at about $2,621 per ounce, up about 27.5% this year.
Goldman Sachs Group also predicted this week that gold prices may climb to $3,000 per ounce by the end of next year due to increased central bank demand and inflows into exchange-traded funds (ETFs) due to changes in the Federal Reserve’s interest rate.
UBS also pointed out that many central banks’ gold reserves still account for a small proportion of total assets, but it is expected that central banks will increase their purchases: “They tend to buy physical gold bars. For diversification purposes and geopolitical tensions, sanctions risks, etc., central banks may continue to increase their reserves.”
