Gold Price Exceeds $3,000 per Ounce... Upward Trend Continues

As international gold prices surpassed $3,000 per ounce, forecasts suggest that the upward trend will continue. Under the trends of deglobalization and bloc formation, demand from central banks around the world is expected to persist, and favorable conditions for gold investment, such as the decline in U.S. bond yields, are anticipated.

On the 25th, Soobin Shim, a researcher at Kiwoom Securities, stated in a report, "Although gold prices showed a short-term weakness after the U.S. Federal Reserve (Fed) lowered its rate cut forecasts in December last year, the upward trend resumed at the beginning of this year." He added, "Looking at the World Gold Council (WGC)'s decomposition data on gold price fluctuation factors, it can be seen that the rise in gold prices at the start of the year was driven by risk and uncertainty."

Gold, a representative safe-haven asset, has recently maintained a strong trend around $3,000 per ounce. He explained, "One of the issues that recently stimulated uncertainty in the financial markets was the tariff policies of the Donald Trump administration." He continued, "After President Trump's inauguration, concerns over trade disputes expanded, and the Fed announced it would be cautious about rate cuts due to uncertainties caused by tariff policies, negatively impacting future economic outlooks."

Additionally, gold purchases by major central banks have been cited as a key factor driving gold prices higher. He noted, "Until before 2010, central banks and other institutions were net sellers of gold, but after the global financial crisis, they shifted to net buyers." He mentioned, "Since 2022, the volume of gold purchases has surged significantly."

Researcher Shim predicted that while gold prices may undergo a correction in the second quarter, the upward trend will continue. He said, "The trend of gold purchases by central banks and other institutions is expected to be maintained." He added, "Even if Russia and Ukraine begin a ceasefire and move toward peace, unless the related issues signify a complete resolution of conflicts between Western and non-Western countries, trends such as deglobalization and bloc formation are likely to persist." He further stated, "In this case, there will be no change in the gold purchasing stance of central banks."

He also forecasted that the Trump administration's tariff policies would continue to have an impact. He said, "Looking back at the first Trump administration, gold buying was concentrated among countries with strained relations with the U.S." He added, "During the trade dispute between China and the U.S., the People's Bank of China was one of the active gold buyers." He emphasized, "Currently, as the Trump administration stimulates policy uncertainty by imposing large-scale tariffs based on America First principles, a repetition of past patterns is expected."

However, there is also a possibility of a correction given that gold prices have reached historic highs. He explained, "Based on the strong gold prices since the beginning of the year, both the nominal and real prices of gold have reached historic highs for the first time since the 1980s, which may reduce the investment appeal of gold." He added, "The U.S. Fed is maintaining a cautious stance on further rate cuts, and as Trump's tariffs appear to be used as a negotiation tool, the financial market's sensitivity to Trump's trade policies is weakening, which also increases the possibility of a gold price correction."