Commerzbank’s Commodity Analyst Carsten Fritsch has revised the gold (XAU/USD) price forecast significantly upwards to $2,500 per troy ounce by the end of the year. This marks a $200 increase from previous predictions.
Inflows Are Still Comparatively Subdued
Despite the positive outlook, Fritsch notes that inflows are still comparatively subdued. The price has already reached a high level, and further gains may be limited in the short term. The main driver behind the recent price increase has been the expectation of interest rate cuts by the US Federal Reserve.
With interest rate cuts already priced in by the market, additional impetus may be lacking. The high price level could also impact physical demand, as seen in the second quarter. The future of central bank Gold purchases and trends in Gold ETFs remain uncertain.
However, Fritsch suggests that escalating tensions in the Middle East could lead to a temporary boost in the Gold price, given its role as a safe haven asset. Looking ahead, continued Fed interest rate cuts, persistent US inflation, and a weaker US dollar could support a further rise in Gold prices in the first half of 2025.
Analysis and Conclusion
The revised Gold price forecast of $2,500 per troy ounce by the end of the year indicates a bullish outlook for the precious metal. Factors such as interest rate cuts, inflation rates, and geopolitical tensions will play a crucial role in shaping Gold’s performance in the near future.
Investors should closely monitor these developments and consider diversifying their portfolios to include Gold as a hedge against market uncertainties. With potential for further price increases, Gold could prove to be a valuable asset in protecting and growing wealth in the coming months.