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Informist, Tuesday, Jan. 7, 2025

 

MUMBAI – Global investment bank Goldman Sachs no longer expects prices of gold to reach $3,000 per ounce by the end of this year, mainly because of the US Federal Reserve's slower rate cut path in 2025, according to a report by Kitco News. The investment bank now expects gold prices to reach $3,000 per ounce only by mid-2026.

 

The slower monetary policy easing by the Fed could depress demand for gold-backed exchange-traded funds this year, and prices of the yellow metal are expected to reach $2,910 per ounce by the fourth quarter of 2025 (Oct-Dec), the report said, citing Lina Thomas and Daan Struyven, both analysts at Goldman Sachs. Weaker-than-expected ETF flows in December driven by easing uncertainty after the US election also resulted in a lower starting point for gold prices into the new year, the analysts said in a note.

 

Lower speculative demand and structurally higher central banks' buying have effectively offset each other, keeping gold prices range-bound over the past few months, the analysts said. However, demand from central banks will remain a key driver for prices in the long term. "Looking ahead, we forecast monthly purchases to average 38 tonnes through mid-2026," the analysts said.

 

The investment bank noted that the US government's growing debt could prompt more central banks to increase their gold holdings, according to the report. Additionally, US President-elect Donald Trump's threat to impose trade tariffs could also support gold prices in 2025. "An unprecedented escalation of trade tensions could revive speculative positioning in gold," the analysts said.

 

At 1244 IST, the most-active February gold contract was at $2,653.2 per ounce, up 0.2% from the previous close.  End

 

US$1 = INR 85.69

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Ashutosh Pati

Edited by Tanima Banerjee

 

 

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