Due to the current state of the world, gold prices have been rising steadily for the past two months, beginning in February, and there is no indication that this trend will end anytime soon. According to Goldman Sachs’ predictions in a note regarding precious metals, the price of yellow metal is expected to increase to $2,700 per ounce this year.
Gold’s relative stability following this week’s stronger-than-expected US CPI print, according to a note from Goldman Sachs to its clients, is more evidence that the metal’s bull market is not being driven by the typical macro suspects.
“The traditional fair value of gold would connect the usual catalysts-real rates, growth expectations and the dollar-to flows and the price. None of those traditional factors adequately explain the velocity and scale of the gold price move so far this year. Yet that substantial residual from the traditional gold price model is neither a new feature nor a sign of overvaluation. Indeed, the majority of the gold upside since mid-2022 has been driven by new incremental (physical) factors, not least a significant acceleration in EM Central Bank accumulation as well as Asian retail buying,” the note stated.
The firm raised its price projection from the previous expectation of $2,300 per ounce to $2,700 per ounce by year’s end based on the rebased price level and favorable pricing dynamics that they saw continuing to play out.
“The positive factors for gold outweigh the negative. The heightened tensions in Middle East is the main driver for gold’s recent surge,” said Chris Gaffney, president of world markets at EverBank to news agency Reuters.
As investors fled to safe-haven assets due to mounting Middle East tensions, gold prices surged past $2,400 an ounce to an all-time high on Friday, beginning their fourth week of gains.
