Although gold prices are struggling below the 4,600 USD/ounce threshold, many experts still maintain optimistic views on the long-term prospects of the precious metal.
In an interview with Kitco News, Mr. Nitesh Shah - Director of Commodity and Macroeconomic Research at WisdomTree (a US asset management company specializing in providing ETF funds and investment products, and making many forecasts about the financial market such as gold, interest rates, USD) said that short-term volatility and macroeconomic risks are increasing the possibility of central banks making policy mistakes. This is a factor that could support gold prices in the medium and long term.
According to Mr. Shah, gold has not yet fully demonstrated its role as a safe haven asset in the context of escalating geopolitical tensions. However, selling pressure largely stems from liquidation and technical factors in the financial market, rather than the weakening of fundamentals.
He emphasized that central banks are facing a difficult problem when they have to both control inflation and avoid pushing the economy into recession or falling into a state of stagnation. Policy management in this context poses a risk of errors, thereby creating momentum to increase gold prices.
Central banks are well aware that policy space is no longer much if they do not want to harm the economy," Mr. Shah said.
In addition, uncertainty in monetary policy orientation, especially when operating priorities change, may increase volatility in the financial market. According to Mr. Shah, if policymakers try to achieve too many goals in a short time, the risk of error will be even greater, thereby supporting gold prices.
On that basis, WisdomTree experts predict that gold prices may approach historical peaks in the first quarter of 2027, with a base scenario around 5,500 USD/ounce. He also said that this is still a relatively cautious level in the context of strong investment demand.
Even in a more negative scenario, when inflation cools down to 2%, the USD strengthens and bond yields rise, gold prices can still remain around 4,630 USD/ounce. "The risk of depreciation is relatively limited, while the room for increase is still greater," Mr. Shah said.
Not only gold, silver is also assessed to have positive prospects. Mr. Shah predicts that silver prices could reach about 92.5 USD/ounce by early 2027, thanks to increased industrial demand, especially from the electrification process and solar energy development.
According to him, in the context of the global economy facing the risk of recession, gold is often clearly benefited. Along with that, increasing public debt pressure and the long-term weakening trend of the USD are also important supporting factors.
Material demand from Asia, especially China and India, continues to play a supporting role for the market, although high prices may affect jewelry consumption. At the same time, many institutional investors are increasing their holdings of gold as part of a portfolio diversification strategy.
Mr. Shah believes that gold is increasingly seen as an alternative asset to the traditional bond channel in the context of volatile debt markets.
In addition, the trend of central banks increasing gold reserves and using precious metals as a neutral, highly liquid reserve asset also contributes to strengthening long-term prospects.
Instability is the factor that drives cash flow to gold," Mr. Shah said, while saying that gold prices are still lower than the level that fully reflects the risks existing in the market.
