Gold prices rose to record levels due to the escalating tension in the Middle East. The shiny metal broke a record last week, rising above $2,400. Even though it has slipped slightly from its peak for now, gold investors are still waiting for more. However, according to one research firm, the yellow metal may have peaked.
Gold prices have exceeded expectations, so…
cryptokoin.comAs you follow from , US CPI came above expectations. This has increased expectations that the Federal Reserve will continue its aggressive monetary policy for longer than expected. That’s why some analysts say the precious metal is hitting highs for the year. Capital Economics’ Chief Commodity Economist Caroline Bain expressed her thoughts on this issue in her latest report. Although Bain is bullish on gold for this year, it says the price has far exceeded expectations. She also expects prices to fall again by the end of the year. In its latest research note, Bain includes the following assessment:
The 16.5% rise in the gold price since the beginning of the year looks increasingly out of sync with the interest rate outlook. Indeed, the strong US jobs report released last Friday and the March CPI data released on Wednesday coincided with rises in the price of gold, suggesting that interest rates may remain high for longer.
Gold price target for the end of the year: $2,100!
Gold prices fell from Friday’s high. However, the yellow metal continues to post solid gains in record territory. Caroline Bain maintains its year-end gold price target at $2,100. The economist points out the geopolitical uncertainty surrounding the increasing chaos in the Middle East. Bain acknowledges that this chaos has created safe-haven demand for the shiny metal in recent weeks. However, this is not a sustainable trend, she says. In this context, the economist makes the following statement.
Other safe havens such as the Swiss Franc are not performing strongly. Additionally, there are constant outflows from European gold ETFs.
The biggest push for shiny metal!
The biggest driver for the yellow metal this year is physical demand in China, says Caroline Blain. This will help gold defy headwinds from changing monetary policy expectations, the economist notes. In this regard, she states that premiums on the Shanghai Gold Exchange have reached record levels compared to those traded in London. But Blain expects demand to weaken by the end of the year. She explains her views on this subject as follows.
Chinese investors’ interest in gold is not surprising, considering that potential investment opportunities in China have narrowed over the past few years due to the decline in real estate valuations and the decline in stock prices. However, we expect China’s gold frenzy to eventually fade and more traditional drivers of prices to take over later in the year. This view is based in part on our prediction that Chinese stocks will partially recover in the coming years.
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