Amid growing uncertainty surrounding the U.S. elections and escalating conflicts in the Middle East, investors are flocking to gold as a safe haven asset. The combination of rising geopolitical tensions and loose monetary policies has driven gold prices to new heights, with no signs of slowing down. Currently, spot gold is trading at $2,734.41 per ounce, while gold futures stand at $2,748.55 per ounce. Analysts on Wall Street predict that the upward trend in gold prices is far from over and could continue to reach new records.
Paul Wong, a market strategist from Sprott Asset Management, described this phase as a "new bullish phase" for gold, driven by central bank purchases, rising U.S. debt, and a potential peak in the dollar. Historically, increased U.S. debt as a percentage of GDP has correlated with rising gold prices due to concerns over debt sustainability and currency devaluation. With the Congressional Budget Office projecting public debt to rise from 98% of GDP in 2023 to 181% by 2053, Wong highlighted the growing likelihood that governments may resort to printing money, which could devalue currencies and increase gold's attractiveness as a store of value.
Despite retail demand for gold dropping in recent months, the World Gold Council reports that central bank net purchases of gold are set to rise to 483 tons in the first half of 2024—a 5% increase over the previous year. This rise in demand further supports the case for higher gold prices.
Many analysts are setting price targets of $3,000 per ounce for gold, with Bank of America's commodities strategist, Michael Widmer, expressing optimism about reaching this milestone due to ongoing geopolitical uncertainties and rising government debt levels. Citi analysts also maintain that gold could hit the $3,000 mark within the next 6 to 9 months, particularly if oil prices surge due to Middle Eastern tensions.
The Commonwealth Bank of Australia's analyst, Vivek Dhar, predicts that the average gold price will reach $3,000 per ounce by the fourth quarter of next year, citing a weakening dollar as a major factor. Global X's investment analyst, Trevor Yates, suggests that it is not too late to invest in gold, pointing to robust physical and financial market demand as key drivers of gold's upward trajectory.
