Gold’s historic rally this year has prompted analysts to revise their forecasts for the yellow metal with ING Group being the latest to scale up their outlook.
Gold broke through the $4,000-per-ounce mark for the first time on October 8, propelled by mounting worries about the US economy and a potential government shutdown, extending its record-breaking rally to more than 50% this year.
The ongoing US shutdown has postponed the release of crucial payroll data, intensifying the existing economic uncertainty.
With official economic indicators unavailable, traders are increasingly relying on private reports for insights.
This data vacuum presents a challenge for the central bank in formulating monetary policy.
Despite these uncertainties, markets are still anticipating a quarter-point interest rate cut this month. Such a cut would be advantageous for gold, as it is a non-interest-bearing asset.
Source; ING Research
Market fundamentals lead to price revisions
Robust safe-haven demand for gold is being driven by this policy uncertainty, rising expectations of Federal Reserve easing, and concerns regarding the Fed’s independence.
“The precious metal has staged a record-breaking rally, doubling in less than two years, spurred by central bank buying as they diversify away from the US dollar, Donald Trump’s aggressive trade policy, and conflicts in the Middle East and Ukraine,” Ewa Manthey, commodities strategist at ING Group, said in a report
With central banks still buying gold and ETF (exchange-traded fund) investments remaining strong, gold is likely to continue its rally, according to ING Group.
ING has revised upwards its forecast for the yellow metal for this year and 2026.
Prices are now forecast to average $4,000 per ounce in the fourth quarter, resulting in an average of $3,402 an ounce for the current year. For 2026, the expected average price is $4,150 an ounce.
Gold’s price has consistently risen during periods of global uncertainty. It exceeded $1,000 following the global financial crisis and reached $2,000 during the COVID-19 pandemic.
Most recently, the announcement of tariffs by Donald Trump pushed its value past $3,000.
Inflows into gold ETFs
Investors have been rapidly increasing their allocations to gold ETFs.
This year, the total gold held by ETFs has surged by 17%, reaching its highest point since September 2022. Typically, investor holdings in gold ETFs correlate with gold prices, rising when prices increase and falling when prices decline.
Manthey said:
There is still room for further additions, given the current total remains shy of the peak hit in 2020. More inflows could push gold even higher.
Source: ING Research
Central bank buying
Central banks significantly contributed to gold’s rally, resuming their purchasing in August by adding 15 tonnes to global gold reserves. This followed a static period in July, as reported by the World Gold Council.
Following Russia’s 2022 invasion of Ukraine, central banks significantly increased their gold purchases, doubling the previous pace.
This heightened demand for gold stems from several factors, including countries’ concerns about potential Russian-style sanctions on their foreign assets, influenced by the US and Europe’s decision to freeze Russian assets, as well as evolving strategies for currency reserves.
For the third consecutive year, central banks had collectively purchased over 1,000 tonnes of gold in 2024.
Manthey added:
Looking ahead, we believe central banks will continue to add gold to their reserves given the still-uncertain economic environment and the drive to diversify away from the US dollar.
What lies ahead?
With central banks continuing their purchasing, the ongoing trade war initiated by Trump, persistent geopolitical risks, and expanding ETF holdings, the current bull run in gold appears poised for further growth, especially as expectations for additional Fed rate cuts increase, according to Manthey.
However, Manthey believes that gold prices could face headwinds from world peace.
The recent peace pact between Israel and Palestinian militant group Hamas has dialed down the geopolitical tensions in the Middle East for the time-being.
Any such agreement between Ukraine and Russia could also affect gold’s appeal as a safe-haven asset.
“A major market sell-off could force investors to dump gold to raise cash,” Manthey said.
And if prices stay high for too long, physical demand could weaken, leading to demand destruction.
Gold’s historic rally this year has prompted analysts to revise their forecasts for the yellow metal with ING Group being the latest to scale up their outlook.
Gold broke through the $4,000-per-ounce mark for the first time on October 8, propelled by mounting worries about the US economy and a potential government shutdown, extending its record-breaking rally to more than 50% this year.
The ongoing US shutdown has postponed the release of crucial payroll data, intensifying the existing economic uncertainty.
With official economic indicators unavailable, traders are increasingly relying on private reports for insights.
This data vacuum presents a challenge for the central bank in formulating monetary policy.
Despite these uncertainties, markets are still anticipating a quarter-point interest rate cut this month. Such a cut would be advantageous for gold, as it is a non-interest-bearing asset.
Source; ING Research
Market fundamentals lead to price revisions
Robust safe-haven demand for gold is being driven by this policy uncertainty, rising expectations of Federal Reserve easing, and concerns regarding the Fed’s independence.
“The precious metal has staged a record-breaking rally, doubling in less than two years, spurred by central bank buying as they diversify away from the US dollar, Donald Trump’s aggressive trade policy, and conflicts in the Middle East and Ukraine,” Ewa Manthey, commodities strategist at ING Group, said in a report
With central banks still buying gold and ETF (exchange-traded fund) investments remaining strong, gold is likely to continue its rally, according to ING Group.
ING has revised upwards its forecast for the yellow metal for this year and 2026.
Prices are now forecast to average $4,000 per ounce in the fourth quarter, resulting in an average of $3,402 an ounce for the current year. For 2026, the expected average price is $4,150 an ounce.
Gold’s price has consistently risen during periods of global uncertainty. It exceeded $1,000 following the global financial crisis and reached $2,000 during the COVID-19 pandemic.
Most recently, the announcement of tariffs by Donald Trump pushed its value past $3,000.
Inflows into gold ETFs
Investors have been rapidly increasing their allocations to gold ETFs.
This year, the total gold held by ETFs has surged by 17%, reaching its highest point since September 2022. Typically, investor holdings in gold ETFs correlate with gold prices, rising when prices increase and falling when prices decline.
Manthey said:
There is still room for further additions, given the current total remains shy of the peak hit in 2020. More inflows could push gold even higher.
Source: ING Research
Central bank buying
Central banks significantly contributed to gold’s rally, resuming their purchasing in August by adding 15 tonnes to global gold reserves. This followed a static period in July, as reported by the World Gold Council.
Following Russia’s 2022 invasion of Ukraine, central banks significantly increased their gold purchases, doubling the previous pace.
This heightened demand for gold stems from several factors, including countries’ concerns about potential Russian-style sanctions on their foreign assets, influenced by the US and Europe’s decision to freeze Russian assets, as well as evolving strategies for currency reserves.
For the third consecutive year, central banks had collectively purchased over 1,000 tonnes of gold in 2024.
Manthey added:
Looking ahead, we believe central banks will continue to add gold to their reserves given the still-uncertain economic environment and the drive to diversify away from the US dollar.
What lies ahead?
With central banks continuing their purchasing, the ongoing trade war initiated by Trump, persistent geopolitical risks, and expanding ETF holdings, the current bull run in gold appears poised for further growth, especially as expectations for additional Fed rate cuts increase, according to Manthey.
However, Manthey believes that gold prices could face headwinds from world peace.
The recent peace pact between Israel and Palestinian militant group Hamas has dialed down the geopolitical tensions in the Middle East for the time-being.
Any such agreement between Ukraine and Russia could also affect gold’s appeal as a safe-haven asset.
“A major market sell-off could force investors to dump gold to raise cash,” Manthey said.
And if prices stay high for too long, physical demand could weaken, leading to demand destruction.
