Gold Eyes Eighth Weekly Gain Driven by Safe-Haven Demand Amid Tariff Concerns
Gold (GC=F) is poised for its eighth consecutive weekly increase as investors seek refuge in the precious metal amid heightened trade tensions and price disparities between the US and London markets.
On Friday, gold futures (GC=F) retreated slightly from their record high reached in the previous session, hovering around $2,950 per troy ounce. Meanwhile, the spot price in London, which represents the wholesale reserve price, traded near $2,930.
Factors Fueling Gold's Rise
* Safe-Haven Demand: Concerns over escalating tariffs and geopolitical risks, including potential sanctions on gold itself, have driven investors toward gold as a safe-haven asset.
* Central Bank Buying: Central banks worldwide continue to increase their gold holdings, with demand reaching an all-time high in 2022.
* Price Disparity: A wider-than-usual price gap between gold futures in the US and the spot price in London has incentivized institutions to ship physical gold bars to New York vaults.
* Federal Reserve Policy: The Fed's rate-cutting cycle last year made non-yielding assets like gold more attractive to investors.
Gold's Future Prospects
Analysts predict further gains for gold in 2023. Goldman Sachs has revised its year-end price forecast to $3,100 per troy ounce, driven by structurally higher central bank demand, particularly from China.
Global fund managers surveyed by BofA anticipate gold outperforming US equities as the second-best-performing asset class this year, even in a scenario of a "full-blown trade war."
Conclusion
Gold's sustained upward momentum underscores its role as a safe-haven asset amid market uncertainties. The ongoing trade tensions and central bank buying are expected to continue supporting gold prices in the foreseeable future.