Gold rally still far off... $2500 forecast

Central Bank Gold Purchases Drive Investment Demand Amid China's Slowdown

Gold prices continue to show strength, with forecasts suggesting they could surpass $2,500 per ounce. Active gold purchases by global central banks, concerns over China's economic slowdown, and the spread of geopolitical instability are also expected to support demand for gold investments.

On the 22nd (local time), Fund Strat, a U.S. market research firm, stated, "Gold prices are heading toward an all-time high," making this forecast.

Currently, the gold price is $1,997 per ounce, marking a 13.4% increase compared to a year ago. On the 21st, it broke through the psychological barrier of $2,000, approaching the all-time high range of $2,070 to $2,080 recorded in 2020.

Mark Newton, an analyst at Fund Strat, wrote in an investor memo, "With gold prices surpassing $2,000 per ounce, they are expected to rise to the $2,060?$2,080 range. Once gold breaks through the $2,080 level, it will represent a clear technical breakthrough. A rapid rise in gold prices is anticipated."

The all-time high for gold prices varies depending on the institution compiling the data, but it is roughly around $2,070 to $2,080 per ounce recorded in 2020. Dow Jones Market Data records $2,089.2 as the all-time high, while Refinitiv and Bloomberg report intraday highs of $2,072.5 and $2,075.47, respectively.

Newton believes that even if gold prices do not reach $2,500 per ounce within this year, breaking through this price level is possible as a "medium-term target." He stated, "Considering the decline in real interest rates, the gold price upcycle, and ongoing geopolitical conflicts, purchasing precious metals appears attractive."

Investing Haven, a forecasting firm for gold, stocks, and cryptocurrencies, predicts that gold prices will surpass $2,200 per ounce next year and $2,500 per ounce by 2025.

The market expects the gold rally to continue next year. First, emerging market central banks such as those in China and T?rkiye are continuing to increase their gold purchases. The World Gold Council (WGC) estimates that central banks worldwide bought 800 tons of gold from January to September this year, a 14% increase compared to a year ago. As Western countries imposed sanctions such as freezing financial assets against Russia following its invasion of Ukraine, demand for physical assets like gold has significantly increased, especially among emerging markets.

In China, amid a growing real estate downturn crisis, not only the People's Bank of China but also individual investors are purchasing gold as a safe asset. The geopolitical uncertainties caused by the Russia-Ukraine war and the conflict between Israel and the Palestinian armed group Hamas are also expected to drive increased demand for gold investments.