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Gold joined the global stock sell-off earlier this week but should regain its footing amid ongoing geopolitical uncertainty and expectations of U.S. interest rate cuts, Ewa Manthey, commodities strategist at ING, said in a report this week. banking monthly update.
The price of gold is still up about 18% since the beginning of the year, thanks to central bank buying, Asian consumers and expected rate cuts by the Federal Reserve. Manthey believes that after a phase of consolidation, gold will maintain its upward momentum.
Central banks’ purchasing power has continued to hold mighty this year, and while gross purchases and sales are down on the same period last year, Manthey predicts that demand from central banks will remain mighty amid the current economic and geopolitical tensions, with prices coming down from record highs.
The analyst also noted that funds continued their recent streak of positive flows, with global gold ETFs posting inflows for the second month in a row after their strongest month since May 2023.
Geopolitics will remain one of the key factors influencing gold prices… [and] The US presidential election in November and a much-anticipated interest rate cut by the US Federal Reserve will also continue to boost gold prices through the end of the year,” Manthey wrote, forecasting gold prices to average $2,380 per ounce in Q3 and peak at $2,450 per ounce in Q4, for an annual average price of $2,301 per ounce.
The monthly Comex gold contract for August delivery (XAUUSD:CUR) ended a turbulent week +0.2% to 2432.10 USD/oz, but August silver (XAGUSD:CUR) closed -2.7% to $27,487/oz this week; gold was up 0.4% on Friday, while silver was flat.
ETFs: (NYSEARCA:GLD), (NYSEARCA:GDX), (GDXJ), (IAU), (NUGT), (PHYS), (GLDM), (AAAU), (SGOL), (BAR), (OUNZ), (SLV), (PSLV), (SIVR), (SIL), (SILJ)
Gold remains a good choice as a hedge amid a turbulent geopolitical situation and a struggling inflation that is struggling to survive, said Ole Hansen of SaxoBank, according to Dow Jones.
“We remain positive on gold as a diversifier to protect against turmoil elsewhere,” Hansen said, and “if the Federal Reserve starts to cut rates, potentially as early as next month, interest-rate-sensitive investors could return to gold via ETFs.”
