Gold racks up another record; banks see gold’s rise running into 2025

Gold futures closed at another record-high Monday, and several big banks foresee gold extending its rally into next year because of a revival in large inflows to ETFs and expectations of additional interest rate cuts from central banks around the world including the U.S. Federal Reserve.

Citi analysts raised their three-month forecast for gold prices to $2,800/oz and set a $3,000 forecast for the next 6-12 months, citing possible further U.S. labor market deterioration, interest rate cuts by the Federal Reserve, and physical and ETF buying.

“Gold is expected to remain strong, as the U.S. economy is clearly late cycle, with further labor market deterioration anticipated… and numerous central banks remain keen buyers,” Citi wrote, adding that gold also should benefit in any scenario that sees oil spiking on escalation of the Middle East turmoil.

Even after a strong 2024, gold’s fundamental price drivers still appear to have upside, from strong demand to slow supply growth to a new global liquidity cycle, Wells Fargo analysts say.

On the demand side, central banks in emerging Asian economies of Asia have stepped up their purchases in recent years, with no sign of slowing anytime soon, Wells Fargo says, with the extra buying apparently driven by concerns over growing government debt levels, especially in Western countries, although China’s soft economic growth also may be sparking demand in China.

Investors are continuing to pile into gold, with open interest in precious metals surging 9% to just over $231B for the week ended October 18, with most of the volume coming from investors entering into gold futures, according to data from J.P. Morgan.

Strength in gold looks to continue through next month, the bank believes, with a potential Republican sweep of elections seen as friendlier for gold, given the potential for amplified U.S. inflationary concerns as well as geopolitical and trade tensions.

The pace of central bank gold purchases has slowed in recent months, but the structural trend for banks buying bullion has not been exhausted, according to J.P. Morgan.

“Gold’s place as a central beneficiary of the global debasement trade is a common theme supporting bullish outlooks across the industry,” JPM writes.

Front-month Comex gold (XAUUSD:CUR) for October delivery closed +0.3% to $2,723.10/oz, its fifth consecutive daily gain and a new record high settlement.

Meanwhile, front-month October silver (XAGUSD:CUR) rallied +2.5% to $33.869/oz, a fresh 52-week high and best settlement value since November 29, 2012.

ETFs: (NYSEARCA:GLD), (NYSEARCA:GDX), (GDXJ), (IAU), (NUGT), (PHYS), (GLDM), (AAAU), (SGOL), (BAR), (OUNZ), (SLV), (PSLV), (SIVR), (SIL), (SILJ)

Precious metals stocks hitting new 52-week highs on Monday included Agnico Eagle Mines (AEM), Alamos Gold (AGI), ASA Gold (ASA), Barrick Gold (GOLD), DRDGold (DRD), Eldorado Gold (EGO), Endeavour Silver (EXK), Gatos Silver (GATO), Harmony Gold (HMY), Hecla Mining (HL), Iamgold (IAG), Kinross Gold (KGC), Newmont (NEM), Osisko Gold Royalties (OR), Pan American Silver (PAAS), Seabridge Gold (SA), Skeena Resources (SKE), Triple Flag Precious Metals (TFPM), Wheaton Precious Metals (WPM)