On Wednesday, gold continued to set new highs, briefly rising above the $2,780 mark, while silver prices also continued to rise, reaching $34 per ounce, the highest level in over a decade.
Central bank purchases of gold have pushed prices up over 30% so far this year, with geopolitical tensions leading investors to focus on precious metals as a safe haven asset, while silver has risen 37% during the same period.
Chris Vecchio, co-head of macro global at trading platform Tastylive, noted, "It's clear that gold and silver have shown very strong momentum in recent weeks and months, but we are really just entering the early stages of a shift toward precious metals that has been years in the making."
Investors are betting on precious metals, anticipating that the Fed and other central banks will continue to cut interest rates. In a low-interest-rate environment, the appeal of high-yield assets like bonds diminishes.
Additionally, precious metals are often seen as a hedge against inflation. While U.S. inflation has recently fallen to around the Fed's target level of 2%, there are still many pressures driving prices higher in the long term, from potential additional tariffs to efforts to revitalize manufacturing.
Vecchio said, "This ultimately means there will be higher structural inflation in the future and lower productivity. Therefore, everything will become more expensive in dollar terms."
Goldman Sachs analysts recently stated that central bank purchases of gold will remain "structurally high," targeting $2,900 per ounce.
Goldman Sachs has repeatedly issued reports bullish on gold, forecasting that by early 2025, gold prices will reach $2,900 per ounce, up from a previous forecast of $2,700. This optimism is largely attributed to a surge in gold purchases by central banks around the world, especially those in emerging markets. Goldman further pointed out that since the Russia-Ukraine conflict, its expectations for central bank demand in the London over-the-counter market have increased fivefold, resetting the relationship between gold prices and interest rates.
The American investment bank's "still bullish" forecast also considers the role of speculators viewing gold as a safe haven amid rising prices, especially ahead of the U.S. elections on November 5.
Despite the potential for a decline in speculative positions in gold following the elections, the bank emphasizes that holding long positions in gold has significant hedging value amid potential trade tensions and financial risks. Goldman expects gold prices to rise by about 10% by December 2025, reaching $3,000 per ounce.
Article shared from: Jin Shi Data