Gold futures (GCM24) broke out to new record highs to close out the week, extending a recent rally for the precious metal. Along with voracious buying by central banks, and increased demand for gold as an inflation hedge, the malleable metal caught a boost today on its safe haven credentials. With geopolitical tensions flaring up between Iran and Israel, gold peaked today north of $2,400 an ounce before paring its gains, and is now up more than 12% on the year - outperforming the S&P 500 Index ($SPX), which has added 8%.
Against this supportive backdrop, analysts at Bank of America earlier this week raised their price forecast for the precious metal. “Gold remains one of our favorite metals and we expect prices to average US$2,500/oz by the fourth quarter, potentially hitting US$3,000/oz by 2025," wrote the analysts. "Notably, demand from central banks and China’s retail buyers has been strong. If Western investors join the party on rate cuts, the yellow metal will move a leg higher; this may also be necessary if sentiment in China improves, and less investment flows into gold.”
