Gold: The Fundamentals Remain Strong
Gold rose sharply in the first half of the year and, even after the subsequent correction, is holding above USD 4,000 per ounce – we saw a similar drop towards this level earlier, see Gold tests USD 4,000 as the dollar hits a high. Market behaviour also suggests that investors see the current dip as a buying opportunity (see also buying gold regularly), not as a signal to sell. What could move the price in the coming weeks, and why do analysts nevertheless remain optimistic in the long term?
What will decide the near term
In the shorter term, the direction of the price will be set mainly by three factors: the moves of the US Federal Reserve, the movement of real bond yields and the strength of the US dollar. Gold pays no interest, so these indicators determine how attractive holding it is compared with interest-bearing alternatives – which is why the market reacts to them most sensitively.
Why gold’s long-term story holds
Short-term swings are one thing, but what supports gold over the longer term has not changed so far:
- central banks around the world keep adding gold to their reserves,
- many large economies continue to run growing fiscal deficits,
- persistent geopolitical tension fuels demand for gold as a safe haven.
How high the price could go
Analysts at HSBC expect that gold could climb to USD 5,000 per ounce by the end of 2027. Even bolder are some estimates by J.P. Morgan, which in one scenario allow for a price of up to around USD 6,000 per ounce. These are the analysts’ own forecasts, not a guarantee of future developments.
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About the author
HEFFO, GOLDU’s blogger, sees everything in context. From a pile of global numbers and news, he fishes out what matters and adds a conclusion you would not have expected. The precision of his conclusions and his love of chocolate suggest he has lived in Switzerland for years.
