Gold surged to a new record on Tuesday, hitting $3,800 in intraday trading as analysts foresee continued growth for the precious metal. Futures rose by 0.8% to around $3,805 per troy ounce, with the immediate delivery price near $3,777. Wall Street remains optimistic, with forecasts from Goldman Sachs and UBS predicting prices could reach between $3,900 and $4,000 by mid-2024.
Analysts attribute this potential for a further rally to declining US real interest rates, driven by Federal Reserve easing measures and sustained inflation. Ulrike Hoffmann-Burchardi from UBS Global Wealth Management highlighted gold’s role as a portfolio diversifier and a hedge against political and economic uncertainties.
Contributing to the metal’s upward trajectory is a weakening dollar and recent rate cuts by the Federal Reserve, which might continue into 2025. This environment has sparked significant inflows into physically backed gold ETFs, the highest in three years, alongside increased central bank purchases.
In addition to Western markets, China’s initiatives may further impact the gold market. The People’s Bank of China is exploring the use of the Shanghai Gold Exchange to encourage bullion purchases abroad, potentially strengthening Beijing’s influence in the global market.
Year-to-date, gold has skyrocketed by more than 40%, with recent trading sessions continuously setting new records. Short sellers may find themselves pressured by this sustained rally, amplified by momentum-driven short coverings, as noted by David Morrison, senior market analyst at FCA.
Despite the rapid ascent, bullish sentiment remains strong, with gold maintaining its status as a reliable safe-haven asset amidst global economic fluctuations.