After a roughly 40% increase in gold prices over the past year – driven primarily by large purchases from central banks and economic uncertainty due to the protectionist trade policies of the United States (U.S.) – the question arises: when will this upward trend end? Not this year, analysts say.
At the end of last week, gold exceeded 3.000 dollars per 31.1 grams for the first time and is currently trading at 3.022 dollars. Since the beginning of the year, the price has risen by about 15%.
Growth forecasts
Investment bank Goldman Sachs analyst Lina Thomas predicted in late February that, following last year’s rise, gold would gain another 8% by the end of this year, reaching 3.100 dollars per 31.1 grams. She adds that, in the case of prolonged uncertainty due to geopolitical risks and U.S. tariffs imposed by President Donald Trump, the price could reach 3.300 dollars. If central banks continue buying more than 70 tons of gold per month on average, the price of 31.1 grams of gold could hit 3.200 dollars by the end of the year.
Swiss bank UBS recently raised its gold price forecast. UBS now expects the price to reach 3.200 dollars per gram by June. If Trump were to abandon his trade policy, which includes import tariffs, it would slow down the so-called defensive gold buying, through which investors seek to protect themselves from unstable markets. In that case, analysts at the bank believe gold would find technical support at 2.850 dollars per 31.1 grams.
The Australian-New Zealand Banking Group ANZ also expects further growth. They expect the price to be 3.100 dollars within three months, and 3.200 dollars within six months.
Central banks lead the trend
According to the World Gold Council, central banks purchased more than 1.000 tons of gold last year, marking the third consecutive year of large acquisitions – twice the average annual purchase over the past decade. Central bank purchases have continued this year, with the main buyers being the central banks of Uzbekistan, China, Kazakhstan, Poland, and India. Last year, Poland’s central bank was the largest buyer, increasing its reserves by 90 tons to a total of 450 tons.
Increased central bank purchases began in 2022 when Western countries froze about 300 billion dollars in reserves belonging to Russia’s central bank following Russia’s invasion of Ukraine. This highlighted the security risk of holding reserves in foreign currencies in overseas banks. Russia’s gold reserves were not subject to sanctions because they were held domestically.
In London, considered the world’s gold trading hub, central bank purchases in spot markets increased about sixfold after assets were frozen. While the monthly purchase average before this measure was around 17 tons, in December last year, central banks bought 108 tons of gold.
“Countries with trade surpluses will seek alternatives to U.S. government bonds. One option that some central banks are already actively using and will likely continue to use in the future is allocating surplus funds into gold, which could continue to have a positive impact on gold prices,” said Matej Mazi, deputy director of investment funds at NLB Skladi.
At the end of last year, the Bank of Slovenia possessed 3.2 tons of gold, which at the current price would mean over 300 million euros, Forbes writes.
