Analysts Back Gold to Extend Gains Beyond All-Time Highs – Here’s Why

Analysts have backed gold prices to maintain momentum in the coming months to reach new all-time highs as central banks continue to cut interest rates.

Gold hit a record high of $2,685.49 per ounce in September, as geopolitical conflicts and trade fears continued to drive investors toward so-called “safe haven” assets, while global central banks (most notably China) ) have increased demand by substantially increasing reserves.

At $2,617 as of Thursday morning, the price of gold has retreated but is still up nearly 27 percent since 2024 began at $2,062.

UBS chief investment officer for global wealth management Mark Haefele said the bank continues to see “fundamental factors that should guide… gold higher in the coming months,” highlighting the Federal Reserve’s rate cuts as a crucial factor.

Minutes from a meeting of the Fed’s rate setters released this week reinforced expectations that the pace of rate cuts will not be as aggressive as initially expected, despite a bumper 50 basis point reduction on last month.

Markets are currently forecasting a roughly 80 percent chance that the Fed will cut another 25 basis points at its Nov. 9 meeting, while most expect another 25 basis point cut in December.

This would take the Federal Reserve’s rate range from its current level of 4.75 to 5 percent to 4.25 to 4.5 percent by the end of the year.

Haefele said: ‘Although markets have recently lowered their expectations about the pace of Federal Reserve easing, the central bank has kicked off its rate cut cycle with more cuts to come.

“Historically, gold has risen as much as 10 percent in the six months since the Federal Reserve’s first rate cut, and demand for ETFs is gaining momentum.”

He added that demand from Chinese investors “remains strong,” while growth in jewelry consumption, continued central bank purchases and uncertainty over the U.S. election should also prove favorable.

UBS forecasts that gold will reach $2,850 an ounce by ‘mid-2025’, which would reflect growth of around 8.9 percent from current prices.

Invesco chief global market strategist Kristina Hooper expects geopolitical tensions to be the main driver of gold’s price rise in the coming months.

She said: ‘Gold appears to have replaced US Treasuries as the ‘safe haven’ asset class of choice for many investors.

‘I expect this trend to continue, given the uncertainty surrounding the US elections and rising tensions in the Middle East.

“Gold could also be more attractive to some investors because the opportunity cost of owning gold decreases as rates fall.”

Join the gold rush or buy picks and shovels?

Retail investors typically buy exposure to gold through exchange-traded funds (ETFs), which are relatively cheap and offer good liquidity in an illiquid market.

However, Kepler’s head of investment company research, Thomas McMahon, suggests investors should consider an alternative entry point.

He says: ‘While an ETF is the obvious solution for an investor looking for exposure to the price of gold itself, the mining sector is also worth considering.

the managers of Ruffer Investment Company They have sold their gold to buy miners, arguing that cheap valuations mean there are more upsides and fewer downsides.

‘Golden perspective precious metals remains the only option for exclusive exposure to miners, and has soared more than 30 percent year-to-date in NAV terms.

‘BlackRock Global Mining It has significant exposure to gold mining, although it remains focused on industrial raw materials, which have greater economic sensitivity, particularly to the Chinese economy.