On Wednesday, gold continued to hit new highs, briefly surpassing 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% year-to-date, with geopolitical tensions focusing investors' attention on precious metals as a safe haven. Silver has also risen 37% during the same period.
Chris Vecchio, co-head of global macro at trading platform Tastylive, pointed out, "It’s clear that in recent weeks and months, the momentum for gold and silver has been very strong, but we are actually just entering the early stages of a multi-year shift towards precious metals."
Investors are betting on precious metals, expecting the Federal Reserve and other central banks to continue cutting interest rates. In a low-interest-rate environment, the appeal of high-yield assets like bonds diminishes.
Additionally, precious metals are generally regarded as a hedge against inflation. Although US inflation has recently fallen to around the Federal Reserve's target level of 2%, there remain many pressures that could drive prices up in the long term, from potential additional tariffs to efforts to revive manufacturing.
Vecchio said, "This ultimately means there will be higher structural inflation and lower productivity in the future. Therefore, everything will become more expensive in dollar terms."
Goldman analysts recently stated that central bank purchases of gold will remain at a "structurally high level," targeting $2,900 per ounce.
Goldman Sachs has repeatedly published bullish reports on gold, predicting that by early 2025, the price of gold 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, particularly those in emerging markets. Goldman further noted 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 in the event of rising prices, particularly ahead of the US elections on November 5.
Despite the potential 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 that by December 2025, the price of gold will rise by about 10%, reaching $3,000 per ounce.
Article reposted from: Jinshi Data