Gold Prices Expected to Climb Amidst Strong Demand and Economic Factors
Gold Prices on the Rise
Recent trends indicate that gold prices are poised for an increase, driven by various factors that challenge the demand for safe-haven assets and the anticipation of fewer interest rate cuts by the US Federal Reserve this year. This information was highlighted in a report on Wednesday.
The report suggests that the renewed upward trend in gold prices is supported by a bullish outlook and robust buying activity, especially from China. Notably, JP Morgan, a prominent US investment bank, has forecasted that gold prices could soar to USD 6,000 by 2029, coinciding with the conclusion of President Donald Trump's current term.
In a surprising turn, China's gold imports surged to their highest levels in nearly a year last month, despite the near-record prices. The central bank of China has reportedly relaxed import restrictions to accommodate this rising demand, resulting in a remarkable 73 percent increase in gold shipments compared to the previous month, totaling 127.5 metric tons.
In contrast, two senior officials from the Federal Reserve, including New York Fed President John Williams and Vice Chair Philip Jefferson, have maintained a cautious 'wait-and-see' approach, leading market analysts to speculate that the likelihood of a rate cut during the June meeting is low. Higher interest rates tend to diminish the attractiveness of non-yielding assets like gold.
Earlier this year, gold prices peaked at a record USD 3,500.05 per ounce on April 22 amid global uncertainties. Although there was a subsequent decline, primarily due to easing tariff tensions between the US and China, gold remains up over 20 percent this year, largely due to significant inflows into gold-backed Exchange Traded Funds (ETFs) and increased speculative demand from China.
On the currency front, the US dollar experienced its fourth consecutive weekly gain last week, as traders adjusted to a diminishing risk appetite and prepared for further signals from the Federal Reserve. A stronger dollar typically reduces gold's appeal.