According to the latest research report by Metals Focus, world gold prices are likely to enter an accumulation phase in the summer months as investors continue to consider between inflationary pressure, the monetary policy outlook of the US Federal Reserve (Fed) and new developments in the Middle East.
Metals Focus believes that tensions between the US and Iran continue to be one of the factors dominating the market. High energy prices remain high, increasing the risk of prolonged inflation, thereby strengthening expectations that the Fed will continue to maintain a tight stance or have another wave of interest rate hikes this year. The high interest rate environment increases the opportunity cost of holding gold - an asset that does not yield yields.
Besides energy prices, Metals Focus believes that the wave of investment in artificial intelligence (AI) also contributes to maintaining inflationary pressure through increased investment and consumption demand, making monetary policy prospects more complex.
In the report, Metals Focus forecasts that gold prices are unlikely to create a clear breakthrough in the short term. According to this organization, the precious metal is likely to continue to fluctuate in the price range formed in recent months, at least until the market begins to reduce expectations about the possibility of the Fed continuing to tighten monetary policy, possibly from the end of the third quarter.
Metals Focus also noted that the gold market is entering a seasonal low point. July and August are usually the weakest times of physical gold demand in the year.
According to Metals Focus, retail investment demand in major markets has slowed down after a strong increase at the beginning of the year. However, after the gold price adjustment in June, gold buying activities in China and India have shown signs of improvement, although the increase is still modest. These two markets will only enter the peak consumption season from the end of August or September.
Although the short-term outlook is not really favorable, Metals Focus still maintains a positive outlook on the long-term trend of gold. This organization expects gold prices to gradually recover from the end of Q3 when the market re-evaluates the monetary policy outlook of the Fed.
Metals Focus said that the fundamental factors that once fueled the sharp increase in gold prices in the past year have not changed, including prolonged geopolitical instability, concerns about the long-term outlook of the USD and the high valuation of the stock market. In that context, gold continues to be seen as a safe-haven asset and an important portfolio diversification tool.
* Note: The above analysis is for reference only, not investment recommendations.
