Gold price targets $3,000 as central bank buying and economic uncertainty drive demand
Gold could get another boost if the U.S. dollar softens
Several themes have come together to fuel gold’s momentum this year. According to George Milling-Stanley, State Street Global’s Gold Strategist, three major themes fueling gold momentum include robust central bank buying, renewed Chinese investment, and heightened demand from Western investors amid geopolitical and economic uncertainty.
Central banks bolster gold reserves
Emerging market central banks are leading the charge, with substantial gold buying aimed at reducing their dependence on dollar-denominated assets. Many of these central banks hold less than 5% of their reserves in gold, so this buying spree isn’t slowing down anytime soon. Central banks have added to their reserves for 14 consecutive years, and their appetite remains strong, especially as they continue to rebalance reserves from dollars to gold. Hence, central bank demand alone is supporting gold’s steady upward price trajectory, creating a solid base for future gains.
Chinese investors flee to gold
The traditional allure of gold has once again captivated Chinese investors due to economic concerns such as deepening real estate troubles and pressure on local stock markets. The “safe-haven” appeal is hard to ignore, especially as domestic assets face ongoing challenges.
This rising demand from China adds a global layer to gold’s appeal. As Milling-Stanley highlights, gold has long been valued as a reliable store of wealth, particularly in times of economic distress.
Western investors eye gold on geopolitical fears
In North America and Europe, investors are equally drawn to gold but for slightly different reasons. Fears surrounding global tensions and a potential economic downturn have many Western investors turning to gold as a hedge. And with a potential Federal Reserve rate cut on the horizon, gold could get another boost if the U.S. dollar softens.
While price predictions vary, sustained demand from these diverse sources could keep gold prices on an upward path, perhaps even pushing toward $3,000 per ounce if conditions persist.
Goldman Sachs supports bullish sentiment on gold as investors see low rates on the horizon and turn to precious metals for stability.
