Financial Institutions Raise Gold Price Forecasts Amidst Rising Economic Uncertainty
In recent weeks, major financial institutions have notably revised their gold price forecasts upwards, driven by escalating fears surrounding trade wars and the ongoing accumulation of gold by central banks. This trend reflects a growing sentiment that gold will continue to thrive as a safe haven in the face of global economic challenges.
This week, analysts at both Citi and UBS have issued revised projections for gold prices, anticipating a sustained bull run for the precious metal as markets grapple with geopolitical tensions and economic instability. The increasing demand for gold has also positively impacted gold-backed cryptocurrencies, with tokens such as PAXG and XAUT mirroring the performance of gold itself. These cryptocurrencies, which are backed by physical gold stored securely in vaults, have been outpacing the broader cryptocurrency market amidst ongoing uncertainty.
Citi has recently adjusted its short-term gold price target to an impressive $3,000 per ounce, while also raising its average price forecast for the year to $2,900, up from a previous estimate of $2,800, as reported by Investing.com. This adjustment has been influenced by a combination of factors, including global growth concerns that are anticipated to drive heightened demand for gold.
Similarly, UBS has increased its 12-month gold price target to $3,000 per ounce, up from an earlier forecast of $2,850. The precious metal has already surpassed the latter figure, currently trading at approximately $2,860 after experiencing a rise of around 9% year-to-date. UBS strategists, led by Mark Haefele, emphasized in a note that gold’s “enduring appeal as a store of value and hedge against uncertainty has again proven itself.”
Furthermore, Citi’s analysis highlights that “trade wars and geopolitical tensions are reinforcing the trend of reserve diversification and de-dollarization,” which is expected to bolster gold demand from the official sectors of emerging markets (EM).
