September 04, 2024 at 01:22PM
Goldman Sachs maintains a bullish outlook on gold, targeting $2,700 per ounce for early 2025. The firm recommends going long on gold due to increasing central bank purchases, anticipated Fed rate cuts, and gold’s role as a hedge against geopolitical risks.
Key Points:
Central Bank Purchases:
Central bank gold purchases have tripled since mid-2022, driven by concerns about US financial sanctions and sovereign debt.
This trend is expected to continue, providing a structural support to gold prices.
Fed Rate Cuts:
Imminent Fed rate cuts are anticipated to attract Western capital into the gold market, which has been largely absent from the recent gold rally.
The influx of capital is expected to further drive up gold prices.
Hedging Value:
Gold serves as a valuable hedge against geopolitical uncertainties, including trade tariffs, risks associated with Fed policies, and concerns over national debt.
Its role as a safe-haven asset becomes increasingly relevant in times of instability.
Conclusion:
Goldman Sachs’ recommendation to go long on gold is underpinned by structural increases in central bank purchases, expected Fed rate cuts, and gold’s effectiveness as a hedge against various geopolitical and economic risks. The target of $2,700 per ounce by early 2025 reflects confidence in these driving factors.
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This article was written by Adam Button at www.forexlive.com.
