Gold Price Forecast: Analysts Predict Upside Despite Short-Term Volatility
Gold Retreats After Rapid Gains Amid Tariff Announcements
Following a remarkable 10% surge year-to-date, gold prices experienced a slight pullback on Tuesday. However, Wall Street analysts remain optimistic about the precious metal's future prospects due to recent tariff announcements and escalating trade war concerns.
Tariff Impact on Gold Prices
Gold futures initially surged to an all-time high of over $2,960 in response to President Trump's tariff plan on steel and aluminum imports. However, the market has since retraced slightly.
Bullish Outlook for Gold
Solita Marcelli, UBS Global Wealth Management's chief investment officer for the Americas, believes gold remains an effective portfolio hedge. She recently raised her gold price forecast to $3,000 per ounce by 2025, citing continued support from risk aversion and strong demand.
Trade War Fears Boost Demand
The European Union's vow to impose countermeasures and Trump's potential retaliatory tariff plan have fueled concerns of a trade war. Such uncertainty typically increases demand for safe-haven assets like gold.
Monetary Policy Implications
Analysts also expect the Federal Reserve's potential rate cuts later this year to support gold's investment case. Investors will closely monitor the Consumer Price Index (CPI) data on Wednesday for clues about the Fed's future monetary policy stance.
Short-Term Volatility Warning
While analysts remain bullish on gold's long-term prospects, they caution against overextension in the short term if tariff threats subside.
Supportive Factors for Gold
Central bank buying and ETF inflows have contributed significantly to gold's rise over the past year. China's recent approval of insurance firms to purchase gold as part of a pilot program is expected to further bolster demand.
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