A report from Fidelity (one of the world's largest financial asset and services management groups, based in the US) said that although economic concerns have helped gold prices set new records and long-term supporting factors still exist, the recent strong increase in gold requires investors to be cautious.
The latest period of gold Son started in the fall of 2022, when trading prices were around 1,670 USD/ounce. Since then, gold prices have nearly doubled, the report said.
Although demand has increased widely during this price increase, the purchase of gold by central banks outside the Organization for Economic Cooperation and Development (OECD) is a notable factor.
There has been a shift away from the US dollar by some central banks, causing gold purchases to exceed 1,000 tons per year in the period of 2022 - 2024. For example, the central bank that bought the most gold in 2024 was Poland with 90 tons. I think ASEAN countries will continue to increase gold purchases," said Boris Shepov, co-chair of Fidelity Select Gold Portfolio (FSAGX).
Fidelity also mentioned China - the world's largest gold consumer, where domestic gold demand peaked for 11 months despite gold prices approaching record highs.
Chinas total gold imports in April reached 127.5 tonnes according to Chinese customs data. Domestic demand is so strong that the People's Bank of China must ease restrictions on gold bullion imports, the report said.
The long -term concerns about the health of the US and global economy are also the factors that support the long -term gold price. "The worry of recession lasts for several years has promoted safe shelter purchase activities, helping gold to overcome important technical landmarks 2,000 USD/ounce, which is considered as the resistance threshold throughout the early 2020s. When the risk of recession in the US increased - the closest to the US GDP turned to decline in the first quarter and Moody’s lowered the US credit rating from 'AAA' to 'AA1' - the increase in the price of gold and the price of $ 3,000/$ 3,000/$ 3,000/$ 3,000/$ 3,000 - Fidelity analysis.
Ryan Oldham - co-manager of FSAGX Fund with Shepov - said that with the recent increase, investors should adjust short-term expectations.
I think investors should be cautious with the current price, as gold may be going beyond the baseline driven by real interest rates. In my opinion, there are two opposing forces: inflation and real interest rates on one side, and the possibility of reorienting investment away from the USD on the other" - Oldham said.
Shepov also noted that investors need to keep a long-term view. I believe the long-term path for gold prices is still up. Increased budget allocation and budget deficit are long-term support factors. But remember that gold is a volatile asset, often with corrections of 10 - 15% or more, he said.
Despite many fluctuations, many experts and financial institutions predict that gold prices may continue to increase in the coming time. Citigroup has adjusted its short-term price forecast framework for the precious metal to $3,100 to $3,500 an ounce for three months, significantly above the previous forecast of $3,000-3,300 an ounce released on May 12.
Bank of America believes that gold prices are currently going through an adjustment phase after approaching the 3,500 USD/ounce mark in the first half of 2025. However, in the long term, $4,000/ounce is entirely feasible, especially as uncertainties are likely to return in late 2025 or early 2026.
Goldman Sachs predicts gold could hit $4,000 an ounce this year or early 2026, based on central bank and ETF buying at risk of recession.
